Absa Group has acquired 189.38 million Absa Bank Kenya shares, equivalent to a 3.49% stake, after only 2,045 of the lender’s 66,771 minority shareholders accepted its tender offer, lifting the South African parent’s holding to 71.99%.
The South African lender had offered Ksh.34.50 per share for up to 895.9 million shares, representing 16.5% of Absa Kenya, an offer that could have pushed Absa Group’s holding from about 68.5% to 85%.
Instead, subscription reached just 21.1%, leaving 64,726 minority shareholders on the sidelines and about Ksh.24.4 billion of the Ksh.30.8 billion allocated to the offer unused.
James Kinya, an analyst at Rock Investment Bank, attributed the low uptake to Absa Kenya’s rising share price, which narrowed the premium the tender offer had originally represented.
The stock climbed from Ksh.29.20 on 19 June to Ksh.33.65 when the offer closed on 11 August, and has since reached Ksh.34.40, nearly matching the offer price itself.
Despite the muted response to the tender, Absa Kenya more than doubled its interim dividend to Ksh.0.50 per share, even as first-half net profit declined 9.8% to Ksh.10.5 billion. The enlarged shareholding gives Absa Group an estimated payout of Ksh.1.95 billion from the dividend.
In its half-year results, the lender’s profit after tax fell 9.8% to Ksh.10.53 billion, while profit before tax dropped 15.8% to Ksh.14.15 billion from Ksh.16.80 billion the prior year.
Also Read: Absa Bank Kenya’s Bad Loans Down 17.8% as Loan Book Hits Record Ksh.329.87 Billion
Total operating income declined 6.8% to Ksh.29.33 billion, and net interest income fell 5.4% to Ksh.21.14 billion, with non-interest income contributing Ksh.8.2 billion.
Total interest income slid 8.5% to Ksh.27.37 billion, though this was partly cushioned by a 17.7% reduction in interest expense to Ksh.6.23 billion as the bank lowered funding costs and grew its transactional deposit base.
Absa Bank Kenya Interim Managing Director and CEO Yusuf Omari attributed the earnings pressure to falling interest rates, which compressed asset yields faster than funding costs could adjust.
“While the dynamic operating environment exerted pressure on performance, the Bank recorded strong momentum in the second quarter. This reflects our disciplined execution, continued support for customers through relevant financial and non-financial solutions, and ongoing investment in the long-term resilience and sustainability of the business,” Omari said.
The bank posted a market-leading return on equity of 21.7% for the period, with customer deposits rising to Ksh.380.7 billion and total assets growing to Ksh.558.1 billion.
Absa Group retains the option, subject to regulatory approvals, to launch another tender offer or acquire shares in the market, while keeping Absa Bank Kenya listed on the Nairobi Securities Exchange
