Equity Bank’s profit hits Ksh.19.8 billion on increased lending


Equity Bank’s profit hits Ksh.19.8 billion on increased lending
Equity Group CEO James Mwangi during a past investor briefing. PHOTO COURTESY

In Summary

  • The growth by Kenya’s largest lender by customer base is primarily attributable to increased lending to both its clientele base and government.
  • Equity Group for instance advanced an additional Ksh.33 billion through trading in government securities during the year on top of Ksh.297.2 billion in loans and advances to push interest income up by 10 percent to Ksh.53.2 billion.
  • The lender similarly grew on its customer deposits by 13 percent to Ksh.422.8 billion to reflect on customers increased confidence on the bank.

Equity Bank has announced a five percent growth in profit after tax for the year ending December 31, 2018 to Ksh.19.8 billion from Ksh.18.9 billion in earnings across 2017.

The growth by Kenya’s largest lender by customer base is primarily attributable to increased lending to both its clientele base and government.

Equity Group for instance advanced an additional Ksh.33 billion through trading in government securities during the year on top of Ksh.297.2 billion in loans and advances to push interest income up by 10 percent to Ksh.53.2 billion.

The lender similarly grew on its customer deposits by 13 percent to Ksh.422.8 billion to reflect on customers increased confidence on the bank.

“We are excited to see our deposits grow faster than loans. We know in loans it is the bank that selects borrowers but in deposits, it is the customer that selects the bank. The growth in deposits is nearly double the sector’s average. We view this as a vote of confidence and trust in the bank,” said Equity Group Managing Director James Mwangi.

The group’s non-funded income however slumped by 6 percent to Ksh.25.9 billion from Ksh.27.6 billion in 2017 to reflect on banks’ increasing challenge in growing their non-loan related revenues as was the case with the majority of its tier one peers who include KCB and Barclays Bank.

Equity’s share of non-performing loans similarly rose to 7.6 percent across 2018 from 6.3 percent in spite of an increase in the group’s loan-loss provisioning to an industry high of 93 percent across its banking activities in both Kenya and its subsidiaries.

The bank’s management expects to keep the lender on a positive growth curve supported by its ongoing mix of risk mitigation and cost optimization.

“Equity Bank has in the last two years built the capability to operate under an interest capping environment. These are therefore the results where we have seen our deposits and loan book grow. The government has continued to pay out a higher interest than the public which essentially translates to 14 percent by assessing the latest infrastructure bond issue,” added Mr. Mwangi.

The lender, who now has 96 percent of all transactions managed outside physical banking outlets, has maintained its dividend payout at Ksh.2 on every share to pay a return totaling of Ksh.7.5 billion to shareholders for the end year growth in earnings.

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