Absa Bank Kenya : integrated report 2023

About this report		Our bank		Our strategy	Our performance
Governance		Financial review		Shareholder information

Icons used in this report

The six capitals model

Table of contents

About this report		Page 4
Broad view of our reporting approach,	y	Welcome to our 2023 Integrated Report
including the reporting boundary for the	y	Integrated thinking

Financial capital

Our shareholders' equity and funding from investors and customers,

Manufactured capital

Our business structure and operational processes, including our physical and

Human capital

Our culture and our people, investing in their development and our

Social and relationship capital

Our citizenship and strong stakeholder

Intellectual capital

Our brand and franchise value, research and development, innovation

Natural capital

Our impact on natural resources through our operations and

integrated report and the incorporation of	y	Value creation
integrated thinking in our approach to
y	Material matters
management and reporting.
y	Integrated reporting scope and boundary

which are used to support our business and operational activities, including credit extension.

digital infrastructure, that provide the framework and mechanics of how we do business and create value.

collective knowledge, skills and experience to enable delivery of innovative and competitive solutions for our customers.

relationships, including rapport with the communities in which we operate, recognising the role that the banking sector plays in building a

strong and thriving ecosystem.

capacity, reputation and strategic partnerships, as well as the products that we offer to our customers.

business activities.

Our bank

We offer insights into who we are and why we exist. We explain our purpose, aspirations and values and the attributes that we intentionally seek to portray. In addition, we showcase the segments, products and services that are core to value creation and detail our value-creation business model.

Page 7

• Absa Group presence
• Our purpose, values, aspirations and strategy
• Absa ownership and reporting structure
• Absa Bank Kenya PLC at a glance
• Our structure
• Our products, services and channels
• Our value-creating business model

Stakeholders

Customers	Employees	Society and	Partners	Regulators and	Investors
	and unions	communities		government

Our ability to create, protect and preserve value is dependent on resources and relationships. We are inter-connected with our stakeholders and our contribution to their aspirations is a critical aspect of our strategy and business model. Engaging with stakeholders in a structured and well-coordinated manner, through meaningful, transparent communication, enables us to cultivate relationships that can serve as valuable capital in both good and challenging times. The range and extent of engagements is vast, and our approach is informed by the specific stakeholder as well as the need for engagement. Overarchingly, our intent is to be responsive to their needs and expectations while ensuring we create stakeholder value.

Our strategy

Information on our strategy and how we focus on sustainable value creation. Related to strategy, we also discuss key material matters, including the external environment, key risks and opportunities, and stakeholder needs and expectations, and how these have affected our strategic intent and the creation of value.

Page 19

• Reflections from the Chairman
• Reflections from the Managing Director and Chief Executive Officer
• Our operating environment
• Legal and regulatory review
• Managing risk
• Stakeholders
• Material matters
• Strategy review
• Strategic trade-offs and impacts on our capitals
• Resource allocation

*King IV Report on Corporate Governance for South Africa, 2016™

Sustainable Development Goals (SDGs)

Our performance		Page 47
Insight into our performance in 2023 and how	y	Reflections from the Chief Financial Officer
it has impacted the six capitals and the	y	Human capital
prospects for future value creation.	y	Intellectual and manufactured capital
	y	Social and relationship capital
	y	Natural capital

Sustainability Report and Climate Report expected in June 2024

Governance

Information on how we enhance the creation and preservation of value through good governance and ethical leadership while protecting the Bank from value erosion.

Page 79

• Our Board of Directors
• Our Country Management Committee
• Corporate Governance Statement
• Board Committee reports
• The Absa Way and key policies
• Directors' remuneration report

2

Absa Bank Kenya PLC 2023 Integrated Report and Financial Statements

Absa Bank Kenya PLC 2023 Integrated Report and Financial Statements

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About this report		Our bank		Our strategy	Our performance
Governance		Financial review		Shareholder information

About this report

Welcome to our 2023 Integrated Report

This report is our opportunity to present our value creation journey to date, offering insight into how we have engaged in delivering on our strategy, transforming our business to be locally relevant and future fit, and creating value by "empowering Africa's tomorrow, together …one story at a time" and being a "Force for Good".

Integrated thinking

Integrated thinking underpins the way in which we manage our business and reporting by taking into consideration the capitals that we use or affect and trade-offs made to achieve our strategy. It takes into account the connectivity and interdependencies between the range of factors that affect our ability to create value over time. An integrated approach enables us to focus on maximising value creation and preservation while minimising erosion as we manage our environmental, social and governance (ESG) impacts, responding to legitimate stakeholder needs and interests and navigating material external factors, risks and opportunities.

Value creation

Value creation, preservation and erosion result from the application of our capitals in pursuit of our strategic intent and the eventual outputs and outcomes achieved for our stakeholders. Sustainable value creation is foremost as we execute our strategy with a primary focus on our stakeholders, including society, and is underpinned by our purpose.

Material matters

This report provides context to what we deem our material matters - those with the ability to significantly influence value creation over the short, medium and long term. These matters inform our strategy and influence our approach to managing risks and pursuing opportunities. The determination and assessment of materiality to the business is an ongoing process driven by both external and internal reviews. This is defined through a four-step process of identifying, validating, applying and assessing materiality. Our materiality determination process is discussed in further detail on page 41-42.

About this report		Our bank		Our strategy	Our performance
Governance		Financial review		Shareholder information

Integrated reporting scope and boundary

We aim to provide shareholders with a concise yet sufficiently informed view of Absa's strategy, governance, performance, and prospects in the context of our operating environment, reporting on how value is created, protected or eroded over time. The financial information reporting boundary is defined by control and significant influence over entities as indicated in the diagram below.

				Our value creation,	Strategy and
reporting boundary
	Our purpose	preservation or	Governance	Material matters
	business model
			erosion
						Stakeholders
					Investors				Customers
integratedOur	Ourreportingfinancial boundary(definedcontrolby andsignificantinfluence)			Subsidiaries
AbsaGroup1	Employees				Society

A material issue is a matter that can or could have a significant effect on value creation in the short, medium or long term.

Once material matters have been validated, we apply our strategy in order to respond expeditiously.

Identify	Validate and
prioritise

ApplyAssess

We determine the validity of these matters according to their relevance to our current operating context. This includes validating the matters with the highest potential to significantly impact the viability of our business.

Assessing the material issues and their solutions on a continuous basis allows us to ensure that our strategy remains relevant.

Regulators

Planet

Reporting suite

The Annual Integrated report is intended to provide information to investors on how the Bank creates and protects value while minimising value erosion over the short, medium and long term. This report covers a specific mandate and is supplemented by diverse other publications which provide additional or complementary disclosures relevant to broader stakeholder groups.

Dynamic materiality

Reporting on matters that reflect Absa's significant impacts on the economy, environment and people

Reporting on the subset of sustainability matters that are material for enterprise value creation

Reporting on matters that are recognised in financial performance including assumptions and cash flow projections

Absa Bank Kenya annual reporting suite 2023

Environmental, social and governance disclosures

2023 Sustainability report

2023 Task force on Climate-related Financial Disclosures (TCFD) report

Annual Integrated Report

Financial and risk disclosures

2023 Quarterly Investor Briefings

2023 Half Year Investor Briefing

2023 Q3 Financial Results

30 June 2023 Unaudited group results

2023 Q1 Financial Statement

4

Absa Bank Kenya PLC 2023 Integrated Report and Financial Statements

Absa Bank Kenya PLC 2023 Integrated Report and Financial Statements

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Our bank

Absa Group presence	8
Our purpose, values, aspirations and strategy	9
Absa ownership and reporting structure	10
Absa Bank Kenya PLC at a glance	11
Our structure	12
Our products, services and channels	13
Our value-creating business model	14

About this report		Our bank		Our strategy	Our performance
Governance		Financial review		Shareholder information

Absa Group presence

Absa is a Pan-African group, inspired by the people we serve and determined to be a globally respected organisation that Africa can be proud of.

We have operated in Africa for over 100 years. We are committed to finding tailored solutions to uniquely local challenges, and everything we do focuses on creating value for our stakeholders. As a financial services provider, we play an integral role in the economic life of individuals, businesses, and nations. We empower and enable - from investing in our employees to uplifting our communities and enabling our customers' ambitions. We unlock opportunities through imagination, energy and passion, finding innovative solutions.

Empowering Africa's tomorrow, together …one story at a time

We meet every challenge with tenacity, ingenuity, positivity and creativity by doing things in a way that is unique to our continent.

That is Africanacity

We serve customers through an extensive branch and self-service terminal network, digital channels, financial advisers, relationship bankers and dealerships, originators, alliances and joint ventures.

About this report		Our bank		Our strategy	Our performance
Governance		Financial review		Shareholder information

Our purpose

Purpose is at the core of everything we do

Absa aspires to be a truly purpose-led organisation. This means making a proud and positive contribution to the world around us and putting our purpose at the core of everything we do.

This year, we began an immersive and inclusive journey to assess whether our purpose statement, bringing possibilities to life, continues to reflect who we want to be as a business. We started by unpacking the building blocks that sit at the intersection of what the world needs, what we have to offer, and what will make us proud. To do this, we conducted offsite workshops with our senior leadership team, engaged with our employees through surveys and virtual platforms, and held discussions with the Board and ExCo. What emerged were key themes around our role in powering Africa's possibilities, enabling our clients to realise their dreams, investing in people and exemplifying integrity. Building on this input, we finalised our new purpose statement in January 2023:

Empowering Africa's tomorrow, together

…one story at a time

15	919		6 416			35 451	114 895	3 million
			point-of-sale	digitally active
countries	branches		ATMs			employees
			(PoS) devices	customers
	Country1	Employees	PoS	ATMs	Branches	Founded
	Botswana	1 073	4 810	114		32	1950
	Ghana	1 187	1 361	166		52	1917
	Kenya	2 130	5 209	196		83	1916
	Mauritius	754	1 585	38		9	1919
	Mozambique	767	1 473	93		45	2002
	Seychelles	270	2 060	22		6	1959
	South Africa	25 719	92 026	5 364		559	1888
	Tanzania2	1 478	1 418	242		62	1945
	Uganda	922	2 124	79		39	1927
	Zambia	786	2 720	104		32	1918
	Nigeria3		Namibia3			Czech Republic4			UK5	USA5
	14 employees	1 employee	136 employees	30 employees	10 employees
1 Banks are wholly owned apart from the following where we hold majority		3	Representative office.
	stakes: Botswana 67.8%, Kenya 68.5%, Mozambique 98.7%, NBC, Tanzania	4	Technical (IT support resources to the Group).
						5

Each word signifies a clear meaning and emotion:

Empowering

As a financial institution we empower and enable - from investing in our colleagues to uplifting our communities and enabling our clients' ambitions.

Empowering is active, every moment, walking together as partners.

We unlock opportunities for our clients through imagination, energy and passion, and finding innovative solutions.

Empowering ensures we invest in people and their capabilities.

Africa's

Our heartbeat is African. We are committed to a Pan-African presence and contribution.

We cherish our home; we care for it, and we invest in it.

We feel a sense of wellbeing and warmth. Africa is a home we are proud of.

It is the continent of our birth more than 100 years ago.

tomorrow

We value our heritage and embrace the challenge of reimagining a better tomorrow - for our colleagues, our clients, and our communities. We know that every action we take, has a consequence for a meaningful tomorrow.

We relentlessly deliver on our commitments today with a long-term mindset through good times and bad.

We are stewards of a sustainably better world. Tomorrow embodies the aspiration of youth and future generations. Tomorrow represents one day to many years.

together

We are a trusted and caring partner, committed to working with all our stakeholders.

We embrace diversity and inclusivity. This strengthens us, unleashes everyone's full energy and enables better outcomes.

We are a collective, holding ourselves and each other accountable for our outcomes.

We are stronger together than alone.

We listen to many perspectives while remaining decisive. We work together to bring our strategic ambitions to life.

…one story at a time

Brick by brick we build a masterpiece - no matter how big or small.

We embrace Africa's heritage of storytelling. Stories bind us.

We see you. We hear your story - it inspires us to act and grounds us in what is real.

We believe that being purpose-led is essential, enabling the Group to navigate difficult choices with agility and ensuring we meet the needs of our broader stakeholders while also rallying and inspiring our people and clients. Ultimately, an embedded sense of purpose will support our long-term sustainability. Part of delivering on this purpose is having clear leadership commitments.

55% and Seychelles 99.8%.	Securities entity.
2 Absa Bank Tanzania (ABT) and National Bank of Commerce (NBC) combined.	6 South Africa 9.7 million and ARO 1.7 million customers.

Our organisational purpose is unique and clearly articulated. It is brought to life in the interactions of our leadership, management, employees, customers, suppliers, host governments and local communities. Our conduct and how we do things are consistent with our purpose.

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Absa Bank Kenya PLC 2023 Integrated Report and Financial Statements

Absa Bank Kenya PLC 2023 Integrated Report and Financial Statements

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About this report		Our bank		Our strategy
Governance		Financial review		Shareholder information

Absa ownership and reporting structure

Absa Group Limited structure

Absa Group Limited

Our performance

About this report		Our bank		Our strategy	Our performance
Governance		Financial review		Shareholder information

Absa Bank Kenya PLC at a glance

Absa Bank Limited*

100%

Absa Bank Botswana Limited

67.8%

Absa Bank Kenya PLC

68.5%

Absa Bank Mozambique, SA

98.1%

Absa Bank Uganda Limited

100%

National Bank of Commerce Limited**

55%

Absa Financial Services Limited*

100%

Absa Bank Ghana Limited

100%

Absa Bank (Mauritius) Limited

100%

Absa Bank (Seychelles) Limited

99.8%

Absa Bank Zambia PLC

100%

Absa Bank Tanzania Limited

100%

Absa Bank Kenya PLC (Absa or Bank), through its subsidiary entities, is a financial services provider with over 100 years of experience in the Kenyan market. A tier-one financier, the Bank offers an integrated set of products and services across retail, business and corporate banking, as well as bancassurance, investment, asset and wealth management services. Absa operates through an extensive network of 84 branches, 208 ATMs countrywide, and 60 cash deposit machines supported by internet and mobile banking channels.

		Absa Bank Kenya PLC structure
Absa Group Limited			Other public shareholders
68.5%	31.5%
			Absa Bank Kenya PLC

Absa Securities Limited

100%

Absa Kenya Nominees Limited

100%

Absa Asset Management Limited

100%

Absa Bancassurance Intermediary Limited

100%

Absa Pension Services Limited

100%

• In South Africa
• In Tanzania

10	Absa Bank Kenya PLC 2023 Integrated Report and Financial Statements

Absa is a customer-obsessed and digitally enabled bank that offers best-in-classtechnology-driven solutions and services. The Bank has built a strong track record in the corporate and retail space enabling business growth, wealth preservation and customer journeys and aspirations.

As one of the largest financial services institutions in the country, Absa is an integral player in the Kenyan economy and society. A purpose-led Bank, Absa seeks to have a shaping role in society and to support the developmental objectives of the country by creating social impact through its core business functions, thus being a force for good.

Key features of the Bank and its performance include:

16.4bn	362.7bn	62.2bn
Headline earnings	Deposits	Market capitalisation
(2022: 14.6bn)	(2022: 303.8bn)	(2022: 66.8bn)
(2021: 10.9bn)	(2021: 269bn)	(2021: 64.4bn)

23.7%	42%	335.7bn
Return on equity	Cost-to-income ratio	Net customer loans
(2022: 22.9% )	(2022: 41% )	(2022: 283.6bn )
(2021: 19.3%)	(2021: 46%)	(2021: Shs 234bn)

2 130	51:49	1 047 422
Employees	Employee gender (F:M)	Customers
(2022: 2 070)	(2022: 50:50)	(2022: 1 009 287)
(2021: 1 979)	(2021: 51:49)	(2021: 917 507)
Absa Bank Kenya PLC 2023 Integrated Report and Financial Statements	11

About this report		Our bank		Our strategy	Our performance
Governance		Financial review		Shareholder information

Our structure

We deliver a wide range of financial products and services through three customer-facing segments to meet the needs of our customers.

	Corporate and Investment Banking (CIB)	Retail and Business Banking (RBB)
Serving	Global, regional and mid-to-large corporates, including	Individuals, micro, small and medium enterprises, regional
	global development organisations, financial institutions and	and local corporates, financial institutions, non-
	public sector institutions.	governmental organisations and public sector institutions.

Products and	Specialist solutions across corporate and transactional	Comprehensive suite of banking and insurance offerings,
services
banking, investment banking, financing, risk management,	including transactional banking, card solutions, lending
	advisory products and services.	solutions, deposit-taking, risk management, investment
	Assist with the sourcing of foreign currency, ensuring the	products and card-acquiring services.
	choice of the correct product or solution to suit a
	customer's international transacting needs.

About this report		Our bank		Our strategy	Our performance
Governance		Financial review		Shareholder information

Our products, services and channels

Products

Bank accounts

Enjoy fast, easy and affordable banking tailored to suit your specific needs with a range of services and rewards through a variety of current, savings and fixed-deposit accounts suitable for personal, business, corporate, Islamic, prestige and premier banking.

Credit products

Benefit from a broad range of lending products, including personal and business loans, overdraft facilities, credit cards, mortgage, asset finance, and insurance premium financing.

Bancassurance

Investment, asset and fund management

Focus areas	Digital platforms: Integrated, end-to-end digital and
	technology enablement to support client experience, new
	products and efficiencies.
	Data and analytics: Transforming data into client value,
	proactively engaging clients via predictive analytics.
	Thriving CIB organisation and people: Innovation culture,
	inclusivity, diversity, high performance and productivity, as
	well as colleague value proposition and experience.
	Shaping role in society: Strategic partnerships with clients,
	thought leadership, education delivery and reform, and
	embedding sustainable development goals in core business
	operations.
	Markets:
	Product expansion: Partnering with other financial
	institutions on the continent to expand our footprint into
	francophone West Africa. Collaborating with other Absa
	Group entities to maximise customers' service delivery.
	Digital platforms: Maximise solution provision in the
	market through digital platforms and collaborative relations
	across the Absa Group.
	Data and analytics: Leveraging the capabilities of the
	recently established Data Office, we look to build on data

Product relevance: Rationalise our product offering to meet customer needs in insurance, flexible transactional accounts, mobile micro loans, diversified card offering, unsecured lending and an expanded mortgage outreach.

Sales effectiveness: Scale our digital fulfilment to improve on productivity and cost efficiency driven by capabilities in data analytics.

Transaction migration: Develop enhanced digital capabilities that provide flexible and efficient service delivery with a drive for adoption of digital channels by our customers in various segments.

Service and customer experience: Promote a service culture of easier, faster, better customer service through quarterly service improvement plans at regional and branch level, training, and service recognition awards.

Relationship deepening: Increase engagements to drive retention and value-based concessionary offerings through portfolio pricing in recognition of loyalty.

In collaboration with our bancassurance entity and approved	Managing client funds to strategically embed them in the
licensed insurers, we offer a comprehensive range of life and	appropriate economic cycles for maximum return generation.
short-term insurance options suitable for personal and business	Take advantage of our wealth solutions through our subsidiary
needs.	entity.

Wezesha Biashara	Women in Business
SME proposition that funds existing businesses to grow through	Proposition that focuses on supporting women entrepreneurs
unsecured loans of up to Shs 10 million, up to 95% asset	and enterprises through financing, advisory, capacity building,
financing, LPO financing and much more.	networking and access to markets.
Services

Absa App	Timiza	ChatBanking (Abby)
Our mobile app provides the solution	Get an instant loan, send money, pay your	This is a world-first secure banking service
that allows customers to bank using
to all your basic banking needs, right	bills or purchase airtime, and get
Facebook or WhatsApp.
at your fingertips.	insurance with the Timiza App.

NovoFX App	Credit card	Internet Banking
Make international payments anytime,	With an Absa card, you get much more	If you love living online, internet banking
anywhere, for free.	than financial freedom-you are in control.	could be the perfect solution for you.

Open an Absa account online within 10 minutes and start transacting!

and scientific insights to expand Customer Value Proposition

(CVP).

Thriving markets business and people: Developing a

competitive Employee Value Proposition (EVP) and

attracting the best human capital to meet the evolving

market needs.

Shaping role in society: Providing thought leadership and

driving policy development through tools such as the Africa

Financial Market Index (AFMI), a barometer of how Africa's

financial markets have performed and participating in key

market associations, including the Bond Market

Stakeholders' Forum (BMSF) and the Treasurers' Forum.

Hello Money *224#

Hello Money Customers dial *224# to access Hello Money without the need for data. Customers can send money to anyone via CashSend, even if the receiving party does not have an Absa account.

Channels

Physical channels	Agency banking
ATMs, branches and POS: Physical footprint of 83	Enjoy a world of convenience with agency
branches, 196 ATMs, 60 cash deposit machines	banking. Deposit and withdraw money from your
and 5 209 POS devices.	Absa account countrywide.

Call centre

Call to speak to an agent on sales, service and general enquiries.

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Absa Bank Kenya PLC 2023 Integrated Report and Financial Statements

Absa Bank Kenya PLC 2023 Integrated Report and Financial Statements

13

About this report		Our bank		Our strategy
Governance		Financial review		Shareholder information

Our value-creating business model

Our performance

About this report

Governance

Our bank

Financial review

Our strategy

Shareholder information

Our performance

Our inputs - the resources and relationships on which we rely			Availability, quality and affordability of capitals
				Financial capital	y	Deposits - Shs 303.8bn	y	Forex liquidity challenges in entire sector
				Our strong capital base, as well as diversified sources of deposits and funding from investors and clients, are used to support our clients,	y	Market capitalisation - Shs 66.8bn	y	Improved deposits

including the extension of credit and facilitating payments and transactions, and to reward shareholders for the capital invested.

Intellectual capital

Our intangible assets, including brand, reputation and franchise value; research and development capabilities; innovation capacity, knowledge and expertise; as well as strategic partnerships, help us grow our business.

• Reputable and leading brand
• Strong brand knowledge and growing affinity
• Innovative and new products
• Best in class cyber security protocol
• Investments in data and analytics
• Enhanced Timiza platform and agency banking proposition
• Strong brand and presence in key markets
• Financial, commercial, technical, risk and management skills and expertise at Board, management and employee level
• Innovative digital portfolio and customer value propositions.

• Product and service innovation
• Key skills required, particularly IT skills, are in short supply due to increased competition and costs, requiring upskilling and enhancement of employee proposition

Human capital

Our culture and our people, our collective knowledge, and our skills and experience, enable innovative and competitive solutions for our clients and create value for all stakeholders.

• 2 070 employees
• Shs 10.7bn paid in employee benefits
• 60% enabled to work from home
• Customer obsessed and performance focused culture
• A vibrant, fun and great place to work
• Employee attrition rate - 7.1%
• Awards - Top Employer Award 2022
• Colleague experience index - 73.4%
• Job satisfaction - 7.81

• Availability of strategically important skills
• Access to experienced management and leadership
• Enhanced skills development including personal and future skills
• Pipeline of ready leaders to replace strategic exits
• Improving colleague experience

Manufactured capital

Our business structure and operational processes, including our fixed assets, such as property and equipment, and digital assets, including digital products and information technology (IT) systems, provide the framework and mechanics of how we do business and create value.

• 83 branches
• 196 ATMs
• 60 cash deposit machines
• Core Banking and Digital Channels availability - 99%,
• ATM uptime - 96%.
• Transactions now taking place outside the branch - 92%
• 60% of back-office processes fully digitised
• Alternative channels - mobile and internet banking

• Alternative channels
• Strategically placed branches
• Enhanced and expanded digital proposition

Social and relationship capital

Relationships with stakeholders, especially the communities within the areas we operate in, are central to our business environment. We acknowledge our role in contributing to both a prosperous society and a strong financial ecosystem.

• Customer experience index 71.9%
• 36 ReadytoWork interns
• 231 740 youth empowered through ReadytoWork
• 10 703 women entrepreneurs benefited from Women in Business
• 574 students benefited from scholarship programme (cumulatively)
• Consumers participating in financial education
• Treating customer fairly score - 86.1%
• Sustainable strategic partnerships
• Sustainable investments
• Robust stakeholder relationships management
• Progressive women in business proposition

• Strong and trusted brand
• Best-in-classyouth empowerment programme

Natural capital

The direct use and impact that we have on natural resources through our own operations, including energy, water and climate, and our influence through our business activities.

• Sustainability programme established
• Sustainable premises
• Sustainable use of natural resources
• Signatory of the Principles for Responsible Banking (PRB)
• Aligning to Principles of Sustainable Insurance

• Resource efficiency
• Green building certification

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Absa Bank Kenya PLC 2023 Integrated Report and Financial Statements

Absa Bank Kenya PLC 2023 Integrated Report and Financial Statements

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About this report		Our bank		Our strategy	Our performance
Governance		Financial review		Shareholder information

Our business activities - what we do

Our outputs - what we produce

About this report		Our bank		Our strategy	Our performance
Governance		Financial review		Shareholder information

Outcomes - how we create, erode value and	Stakeholders Actions to enhance
preserve value for stakeholders	outcomes

A fully integrated business offering delivered through our customer-first digital solutions, ecosystems of financial services, lifestyle and value chain offerings.

1.  Providing payment services and a safe place to save and invest

• Accepting customers' deposits, issuing debt, facilitating payments and cash management, providing transactional banking, savings and investment management products and international trade service.

We provide a range of banking, advisory and insurance offerings for individuals, small and medium-sized businesses, corporates, financial institutions, banks, governments and development finance institutions. We generate revenue through fees, interest from lending, and insurance activities.

Funding and deposits

• Saving products
• Investment products and services
• Fund-raisingfor lending and investment

Output: Innovation of new products

Credit extension

Financial capital

• 6% - growth in total assets
• 19% - growth in customer deposits
• 18% - growth in revenue
• 42% - normalised cost-to- income ratio
• 23.7% - normalised return on equity

• Employee wages and benefits Shs 11.7bn
• Payments to providers of capital Shs 8.4bn
• Payments to government Shs 16.2bn
• Community investments Shs 150m
• Total capital financing Shs 335.7bn
• Green investment Shs 26.9bn
• Local procurement spend Shs 4.5bn

• Diversify revenue streams
• Cost reduction through digitisation
• Enhanced operational efficiency

2.  Providing funds for purchases and growth

• Extending secured and unsecured credit based on customers' credit standing, affordability and risk appetite. Trade and supplier finance, working capital solutions, access to international capital markets and interbank lending.

3.  Managing business and financial risks

• Providing solutions, including fixed-rate loans, pricing and research, as well as hedging, which includes interest rate and foreign exchange.

Extend credit through responsible and sustainable lending practices

• Business loans
• Personal loans
• Asset finance
• Cards
• Mortgages

Output: Net interest income

Asset and wealth management

Provide solutions to manage, protect and grow wealth

Output: Gains and losses from investment activities

Intellectual Capital	y	Improved customer engagement
y Recorded improved Net Promoter Scores (NPS) at branch level	y	AI in fraud analytics

• Improved availability of Timiza platform for customers with 1 125 276 loans advanced in 2023

Human capital	y	Enhanced operational efficiency
y	2 130 service-oriented employees		through technology
y	Employee training and
y	Awards - Top Employer Award 2023
	development
y	Colleague experience index - 75.3%
y	Enhanced organisational culture to
y	Job satisfaction - 8.02
	drive innovation

4.  Providing financial and business support

• Providing individual and business advice, advisory on large corporate deals and investment research.

5.  Protecting against risks (insurance)

• Providing savings and investment policies and compensation for a specified loss, such as damage, illness or death, in return for premium payments.

Facilitate transactions

Enable payments and transactions

Output: Net fee and commission income

Bancassurance

Offer insurance solutions

Output:

• Changes in insurance contract liabilities
• Net insurance premium income
• Net claims and benefits payable on insurance contracts

Manufactured capital

• 83 Branches
• 196 ATMs
• 60 cash deposit machines
• Digitally active clients up by 12%
• Disbursed Timiza loans worth Shs 20.7bn
• Core Banking and Digital Channels availability - 99%
• ATM uptime - 99%.
• 60% of back-office processes fully digitised

• Deployment and improvement of digital propositions
• Increased platform stability

Markets and trading

Provide trading and global-market-related solutions

Output: Gains and losses from banking and trading activities

Other outputs from our business operations include carbon emissions and other effluent and waste.

Social and relationship capital		y	Leveraging strategic partnerships
y	Full regulatory compliance		y	Shifting from debt-led customer
		relationships to transactional
y	252 014 youth empowered through ReadytoWork
		relationships,
y	15 939 women entrepreneurs benefited from women in business
	y	Winning customer primacy
y	Consumers participating in financial education
y	Treating customers fairly score 90%
Natural capital		y	Just carbon transition

y Branch energy improvement programme

• 8.3% reduction in energy footprint
• Green building certification - 5 premises EDGE certified
• 728 095 trees planted

16

Absa Bank Kenya PLC 2023 Integrated Report and Financial Statements

Absa Bank Kenya PLC 2023 Integrated Report and Financial Statements

17

About this report		Our bank		Our strategy	Our performance
Governance		Financial review		Shareholder information

Impacts

Economic impact					Benefits to our people
y	Payments to government entities Shs 16.2bn	y	40% of our Board is made up of women
y	Spend on local vendors Shs 4.5bn	y	49% of our management constitutes women
						y	51% of our employees are women

Contribution to our communities

Impact on the environment

y

20 274 youth trained through ReadytoWork totaling to

y

Total trees planted to date is 1 031 759

252 014 to date

y

Shs 26.9bn disbursed to support climate finance

y

574 needy students supported to access university

y

4 066 tCO

e carbon emissions recorded

education to date

2

• 65 schools supported with computer labs to date
• Shs 219m allocated for sustainability and citizenship initiatives
• 12% of our active suppliers are women, youth and PWDs

We are committed to being a force for good in society and have selected SDGs 4, 8, 10 and 12 as those where can make the most significant impact with a focus on incorporating additional goals in the future.

Our strategy

Awards

Kenya Bankers Association SFI (Sustainability) Awards 2023

• Best in Sustainable Finance
• Best in Bank Operations
• 1st Runner up for Promoting Gender Inclusivity
• 2nd Runner up: Most Innovative Brand
• 2nd Runner up: Overall KBA SFI Awards
  2023 Edition.

Think Business

Awards 2023

• Best Bank in Asset Finance -Winner
• 1st Runners up: Best Bank in Agency Banking-
• 2nd runners up: Best Bank in Retail Banking
• 2nd runners up: Best Bank in Product Innovation
• 2nd Runners up: Best Bank in Trade Financing

Best Bank for

Trade Finance in Africa

• Best Bank for Cash Management in Africa
• Best Trade Finance Platform Initiative in Africa
• Best API Initiative of the Year in Kenya

Reflections from the Chairman	20
Reflections from the Managing Director
and Chief Executive Officer	22
Our operating environment	24
Legal and regulatory review	27
Managing risk	29
Stakeholders	33
Material matters	41
Strategy review	43
Strategic trade-offs and impacts on our capitals	46
Resource allocation	47

Employer of the year awards		Finnovex East Africa Awards 2023		Service Excellence Awards 2023
2023 (EYA 2023)		y Excellence in Digital Banking		y 2nd Place: Best Internal Customer
y	Winner: Human Resource practice and				Experience
	Industrial Relations
y	1st runners up: Learning and Development

18	Absa Bank Kenya PLC 2023 Integrated Report and Financial Statements