Equity Bank Group has posted a 22 percent growth in first quarter net profit to 5.9 billion shillings driven by net interest income and double digit growth in non-funded income.
Equity Group CEO James Mwangi says the lender has reinvented its business model and strategy to focus on eight key areas among them non-funded income growth, treasury, business diversification and cost optimization.
During the first three months of this year, Equity bank’s total income rose 9 per cent to 16.5 billion shillings while total costs reduced by 1 percent.
This was among factors that helped the bank post a net profit 5.9 billion shillings up from 4.9 billion shillings during a similar period in 2017.
James Mwangi attributes the good performance to non funded income which grew 41 per cent and a 65 percent increase to 1.5 billion shillings in the contribution of subsidiaries to the bottom line of the group.
He says adoption of IFRS9 which requires banks to assign risk elements to government securities and trade finance instruments is eating into the bank’s profitability.
He noted that if the cap on interest rates is removed, banks will profile the risk of each borrower with risky ones charged higher interest rates.
Diaspora remittances rose to 18.6 billion shillings up from 3.2 billion shillings in the corresponding quarter.