Absa Bank Kenya, a major financial institution in the country, is currently facing a significant downturn.
Once seen as a story of successful reinvention after its split from Barclays, the bank is now dealing with falling profits, a sudden change in its top leadership, and a series of serious allegations regarding fraud and poor governance.
This situation has raised concerns among shareholders and customers alike.
The bank’s financial troubles became clear in the first quarter of 2026 when it reported a profit after tax of Sh5.3 billion.
This was a 13.8 percent drop compared to the same period last year, marking its first quarterly profit decline since 2017.
This performance was notably worse than its main competitors. For example, Equity Group’s profit grew by over 31 percent, Stanbic by more than 20 percent, and KCB by over 15 percent.
Absa was the only major bank in the country to report a decline.
A key reason for this drop is the bank’s heavy reliance on interest from loans, which makes up about 70 percent of its income.
This is a higher concentration than most of its peers. When the Central Bank of Kenya cut interest rates, Absa’s income from this source fell by 7.9 percent.
The bank’s costs increased sharply. Staff costs went up by more than 33 percent, largely due to payments made for early retirement.
This looked less like a planned efficiency drive and more like an attempt to remove staff quickly.
The bank’s loan book also shrank, even as it invested heavily in government securities that were now offering lower returns.
The bank is dealing with a major leadership crisis. In late June 2026, Chief Executive Officer Abdi Mohamed resigned.
While the official story was that he was pursuing other interests, the reality appears to be much more abrupt.
Reports suggest that when he submitted his notice, the parent company in South Africa, Absa Group, instructed him to leave immediately, without serving any notice period.
He was quickly hired by a rival bank, I&M. This sudden departure, with no transition period, suggests a serious disagreement at the board level.
The acting CEO, Yusuf Omari, now inherits a bank facing multiple challenges.
Beyond the financial and leadership issues, Absa Kenya is also facing a series of damaging allegations and legal cases.
There are accusations that bank staff were involved in or failed to prevent significant fraud.
One case involves a former branch manager who was fired after a court found she had authorized fraudulent transfers of Sh6.3 million.
In another case, a customer is in court claiming the bank allowed unauthorized changes to the mandate of an account belonging to a sports club, leading to millions in improper withdrawals.
The bank is also being investigated following a complaint in Parliament about Sh3 million that disappeared from a customer’s account without authorization.
The most serious allegations involve the bank’s digital lending platform, Timiza. Whistleblowers have claimed that customer data was harvested without proper consent, and that some senior staff considered selling this data.
It is alleged that one employee accessed over 100,000 customer records.
While these specific claims have not been proven in court, they are part of a pattern of concern that has prompted an investigation by the Central Bank of Kenya.
In response to these problems, Absa Group has launched a tender offer to increase its ownership of the Kenyan unit from 68.5 percent to 85 percent. This involves buying up to 895.9 million shares at Sh34.50 each.
While this appears to be a vote of confidence, it is more accurately seen as a move to take direct control of a troubled subsidiary.
The parent company has already indicated that earnings from its African operations, including Kenya, are expected to decline.
For small shareholders, the offer is a good deal, guaranteeing a premium on their shares. However, for larger investors and those who choose to stay, the future is uncertain.
The bank is in a state of enforced transition, is under regulatory investigation, and faces significant risks to its profitability.
Dividends that have been growing could be cut if profits continue to fall. The bank is not collapsing, as it remains profitable, but it has clearly fallen from its high pedestal.
The next few quarters will be critical. Management must show it can control costs, diversify income, and provide honest answers about the governance and fraud issues.
If not, the current situation could worsen, leading to more upheaval.
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