Equity Group posts US$174m in profit after tax boosted by lending

KENYA – Equity Group, a financial service company, has registered a 10 per cent growth in profit after tax to KSh17.46 billion (US$174m) from KSh15.83 billion (US$158m) during the nine months to end September supported by increased interest from lending.

The Group’s net interest income grew by 10 per cent to KSh32.29 billion (US$322m) from KSh29.47 billion (US$294m) in the three months to September.

Loans and advances to customers grew by KSh60.5 billion (US$605m) to KSh348.9 billion (US$3.48bn) up from KSh288.4 billion (US$2.88bn) reflecting a growth of 21 per cent.

About 75 per cent of this loan portfolio was held by enterprises spread in financing trade, housing, energy, water, transport and communication, tourism, restaurants and hotels.

“This was supported by the Young Africa Works partnership between Equity Group, Mastercard Foundation and the Kenya government whose objective is creating 5 million decent jobs for young people,” Group chief executive James Mwangi said.

The program has seen 5,740 young people and women go through a 13-week financial education training program while 6,275 enterprises have commenced a three-year entrepreneurship education program since June 2019.

The Group’s balance sheet grew by to KSh677 billion (US$6.77bn) up from KSh560.4 billion (US$5.6bn) driven mainly by 21 per cent growth in net loans and 40 per cent growth in cash and cash equivalent.

Investments in government securities decelerated to grow only by five per cent as more funds were reallocated to lending to the real economy.

Non-funded income grew by 14 per cent to KSh22.54 billion (US$225m) up from KSh19.83 billion (US$198m) to lift total income by 11 per cent to KSh54.83 billion (US$548m) up from KSh49.3 billion (US$493m).

“The faster growth in total income above net interest income reflects the success of the strategic pursuit of the Group to grow quality income through non-funded income growth,” Mwangi added.

The assets were funded by a growth of 19 per cent in deposits which rose to KSh478.1 billion (US$4.78bn) up from KSh402.2 billion (US$4.02bn).

Shareholders’ funds have grown by 20 per cent to KSh108.7 billion (US$1.08bn) up from KSh90.7 billion (US$907m) while long-term funding grew by 18 per cent to KSh66.3 billion (US$663m) reflecting a stable diversified mix of funding.

The Group’s cost to income ratio improved to 51.3 per cent from 51.5 per cent driven by a faster improvement in the cost to income ratio of the main subsidiary Kenya to 45.9 per cent from 47 per cent.

The improvement in the cost-income ratio is underpinned by efficiency and cost optimization driven by innovation and digitization in the bank.

Equity Bank has said about 97 per cent of all transactions happen outside the branch while 93 per cent of all the Group loan transactions are via the mobile channels.

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