Absa Kenya Hikes Dividend 150% Despite Profit Drop

Absa Bank Kenya’s profit fell 9.8% to KSh10.53 billion in the first half of 2026 as falling interest rates compressed asset yields faster than funding costs could adjust, dragging total operating income 6.8% lower to KSh29.33 billion.

• The earnings decline came despite the bank’s loan book rebounding 8.2% to a record KSh329.87 billion after nearly three years of stagnation.
• Profit before tax dropped 15.8% to KSh14.15 billion from KSh16.80 billion a year earlier, while net interest income declined 5.4% to KSh21.14 billion.
• Absa is targeting further credit expansion through mortgages, small businesses and asset finance.

Total interest income fell 8.5% to KSh27.37 billion, partly offset by a 17.7% reduction in interest expense to KSh6.23 billion as Absa lowered funding costs and expanded its transactional deposit base.

Management said the yield on loans fell 150 basis points to 12.6%, compared with a 90-basis-point reduction in the cost of funds to 2.8%, leaving continued pressure on margins. Chief Financial Officer Diana Mwaniki said the bank expects margin compression to continue and will increasingly rely on loan volumes and deeper customer relationships to offset lower spreads.

Despite the profit decline, Absa raised its interim dividend 150% to a record KSh0.50 per share from KSh0.20. The dividend will be paid on October 15 to shareholders on record as of September 18.

That volume response is already visible with net loans rising to KSh329.87 billion from KSh304.94 billion in June 2025, exceeding the previous June peak of KSh317.95 billion reached in 2023. Loans were still at KSh303.84 billion in March, implying an increase of about KSh26 billion during the second quarter alone. Total assets grew 5.0% to KSh558.12 billion, while customer deposits increased 5.4% to KSh380.68 billion.