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Equity Group posts 8pc growth in profits

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Equity Group CEO Dr James Mwangi

Equity Group Holdings has reported an 8pc rise in first-half net profit to Ksh26 billion from Ksh24 billion recorded over a similar period last year.

Equity Chief Executive Dr. James Mwangi says the group increased its loan loss provision by 89pc to 6.3 billion to cover would-be risks as the lender increased its loan book by 26pc to Ksh817 billion targeting retail borrowers and small enterprises.

Interest income increased by 17pc to Ksh46.4 billion on account of strong returns from government securities where the bank invested Ksh485.6 billion in treasury bills and bonds.

The bank also saw a 42pc jump in non-funded income to Ksh35.7 billion.

Mwangi said the growth in income has been boosted by trade missions to the Democratic Republic of Congo as well as other subsidiaries that have pushed up trade finance and forex trading from cross-border deals.

So far subsidiaries, BCDC, Uganda, Rwanda, and Tanzania accounted for Ksh12.1 billion of profits, meaning that almost half its balance sheet was now outside of Kenya.

During the period under review, the lender has however had to increase loan loss provisions from Ksh3.3 billion to Ksh6.3 billion to increase coverage in case of a default.

The bank says it has managed loan portfolios through diversification in different markets and through credit risk guarantees from development finance institutions. The bank’s loan book jumped 26 percent to Ksh 817.2 billion up from Ksh650.6 billion.

“Gross trade finance revenue grew by 117% with trade finance-related lending growing by 46%, FX total income grew by 68% and diaspora flows grew by 146% to account for 12% of all client FX volumes,” said Mwangi.

East Africa has remained the fastest-growing region in the world. The regional governments are focused on fiscal consolidation with budget deficit reductions.

Given Equity Group’s offensive strategy of focusing on payments, trade finance, FX business among other non-funded income while strengthening efficiency through digitization and defensive approach to liquidity, capital and asset quality buffers, the Group continued to deliver on its stated financial outlook.

Profit After Tax stood at Kshs.26.3 billion reflecting a Return on Equity of 27.7pc and a Return on Assets of 3.5pc

“We are confident Equity Group is strategically positioned as a regional systemic bank among the top 3 in 5 of its 6 operating countries to support further integration and increased cross-border trade under the African Continental Free Trade Area while supporting the region to remain the fastest growing common market in the world to offer opportunity for long term sustained value creation” added Dr. Mwangi.

Margaret Kalekye/Regina Manyara
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