Absa Bank Kenya PLC has restructured loans totalling to Ksh.57 billion in the lender’s extension of cushion to borrowers distressed by the COVID-19 pandemic.

The credit restructures represents 28 per cent of the entire bank loan book as of June 30, 2020.

Extended repayments align to directives of the Central Bank of Kenya (CBK) which in March this year required banks to renegotiate repayment terms with borrowers in light of present volatilities to the macro-economic environment.

“We believe we must help protect lives and livelihoods and that is why we have extended loan repayment holidays,” said Absa Kenya PLC Managing Director Jeremy Awori.

As part of further cushioning to borrowers, the lender disclosed it had lowered the effective interest rates charged on loans to customers along with the recent accommodative monetary policy stance.

The average yield on loans at Absa has for instance come down to 10.3 per cent from a high 11.8 per cent at the end of 2018.

This to mirror the change in the benchmark lending rate which presently stands at 7 per cent in comparison to 9 per cent over a similar period.

Absa reported an 85 per cent decline in profit after tax (PAT) through the first six months of 2020 to Ksh 589 million on the back of one off transition costs and greater loan loss provisioning on Thursday.

The one-off costs which are set to exit the bank’s balance sheet by the end of the year rose to Ksh.1.7 billion from Ksh.560.8 million last year as the lender completed the majority of changeovers including a systems transfer and the rebranding of its assets.

The bank’s top line performance however remained solid having grown both its interest and non-interest funded income marking a rare fete under the challenging environment.

Net interest income improved by 2.7 per cent to Ksh.15.3 billion while non-funded income (NFI) rose by a higher 3.8 per cent to Ksh.5.5 billion.

Absa was however to make higher provisions on expected credit losses which pushed overall costs up.

The loan-loss provisions rose three-fold to Ksh.5.4 billion in the period.

Commenting on the half year turn-out, Absa Country Strategy Director Moses Muthui said the bank was being prudent in its risk mitigation against what will be an unpredictable environment for a long time to come.

“We have increased our level of provisioning to take care of the future. It’s really a choice between being ready for the future and wanting to have short-term profits that are high,” he said.