Equity Bank nine month profit drops 3pc
Equity Bank has announced a three percent drop in net profit for the nine months between January and September which has been attributed to the prolonged electioneering period as well as adjustments to the interest cap regime.
The regional lender has recorded a profit of Sh14.6 billion down from Sh15.1 billion a year earlier.
Speaking during an investor briefing, Equity chief executive officer James Mwangi said the performance was due to a very challenging environment occasioned by protracted presidential results which caused political uncertainty.
“Prolonged drought which has led to food inflation and stressing disposable incomes as well as reduced private sector growth arising from interest rate capping are some of the factors affecting the sectors of the economy,” Mr Mwangi said.
The banks’ loan book shrunk by two percent from Sh271.4 billion to Sh265.4 billion in what the bank termed as the group’s investment in risk free companies.
This saw interest income drop 11 percent to Sh35.4 billion.
Mr Mwangi said a growth of government securities in Kenya and a growing yielding loan book in the regional subsidiaries offset the combined effects of capping of interest rates.
For instance, Equity Bank’s purchase of government securities grew 37 percent during the period from Sh93 billion to Sh127.7 billion.
“Contraction of interest yields and a reduction in the loan book in Kenya to limit the decline in interest income at 11 percent from sh39.8 billion over the period last year to sh35.4 billion,” said Mr Mwangi.
The group’s focus is on regional expansion as the subsidiaries enhance the group’s contribution by 10 percent compared to last year at seven percent.
“The subsidiaries have increased their proportion of loans and deposits in the group from 20 percent to 30 percent. Due to this Equity Bank will be rolling out digitization platform in all diaspora outlets by March next year,” he said.
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