By Caro Njenga
Equity Group’s 2016 net profit dipped to 16.6 billion shillings, down from 17.3 billion shillings recorded in 2015.
The lender blames the 4 percent reduction in profit to poor performance by the South Sudan and Democratic Republic of Congo subsidiaries.
Nonperforming loans doubled from 9 billion shillings in 2015 to 18.75 billion shillings last year with the lender proposing a dividend payout of two shillings per share.
The capping of interest rates at 14 percent, the growth of the non-performing loans and volatility of the exchange rate combined to hurt the profitability of Kenya’s largest bank by customers.
This saw the lender nearly triple its loan loss provision to 6.6 billion shillings from 2.4 billion shillings in 2015.
As a result, banks are now preferring to lend large organizations and government entities whose risk is low as opposed to individuals and micro and small businesses.
This has seen Equity Group steadily shore up its liquidity ratio to 47.6 percent, from 33.2 percent as at December 2015.
The lender’s 2016 full year net profit dipped 4 percent to 16.6 billion shillings as compared to 17.3 billion shilling posted in 2015.
The financier loaned out 40 billion shillings on the mobile phone platform in 2016. Equity Group has proposed a dividend payout of two shillings per share.