Equity full-year profit falls by 12 per cent to Ksh.19.8 billion


Equity full-year profit falls by 12 per cent to Ksh.19.8 billion
Equity Group Managing Director James Mwangi addresses investors during a past briefing

In Summary

  • The profit decline is largely attributable to an elevated cover for potential loan defaults with the lender’s provisioning for the same rising five times to Ksh.26.6 billion from Ksh.5.3 billion as gross non-performing loans surged by 62 per cent to Ksh.59.4 billion.
  • Nevertheless, Equity's operating income in the period rose by 23.6 per cent to Ksh.93.7 billion with both interest and non-interest funded income growing in the year.
  • Subsequent to the profit decline, the board of Equity has withheld the declaration of a final dividend payment to shareholders citing the need to mitigate risks arising from its heavy capital led expansion last year.

Equity Group has reported an 11.6 per cent decline in 2020 full-year earnings with profit down at Ksh.19.8 billion from Ksh.22.4 billion in 2019.

The profit decline is largely attributable to an elevated cover for potential loan defaults with the lender’s provisioning for the same rising five times to Ksh.26.6 billion from Ksh.5.3 billion as gross non-performing loans surged by 62 per cent to Ksh.59.4 billion.

The greater provisions have served to raise the bank’s total operating expenses to Ksh.72.7 billion from Ksh.44.3 billion.

Nevertheless, Equity’s operating income in the period rose by 23.6 per cent to Ksh.93.7 billion with both interest and non-interest funded income growing in the year.

The Group’s net interest income for instance rose by 22.4 per cent to Ksh.55.1 billion while non-funded income was up 25 per cent to Ksh.38.5 billion.

Equity Group Managing Director James Mwangi has termed the performance as resilient against disruptions occasioned by the COVID-19 pandemic.

“We generally adopted a twin strategic approach of being defensive to our stakeholders including customers and staff but also an offensive approach of not wasting a good crisis, taking up opportunities presented by the market,” he said.

During the period, the Group merged its operations in the Democratic Republic Congo (DRC) with the Banque Commerciale du Congo (BCDC) to reach Ksh.1 trillion assets at the end of 2020.

The Group’s asset base, now Ksh.1.015 trillion comprise of Ksh.477.8 billion in net loans and advances to customers.

Equity’s balance sheet further comprises of Ksh.740.8 billion in customer deposits which grew by 53.4 per cent from Ksh.482.8 billion in 2019.

The Group has further disclosed the restructure of Ksh.171 billion in customer loans in tandem with directions of the Central Bank of Kenya (CBK). Customers have nevertheless resumed payments on 30 per cent of the restructured books.

Subsequent to the profit decline, the board of Equity has withheld the declaration of a final dividend payment to shareholders citing the need to mitigate risks arising from its heavy capital-led expansion last year.

This is the second year for the bank shareholders to miss the payout with the bank pulling a Ksh.9.5 billion total dividend settlement to shareholders in 2020.

Nevertheless, the Group now expects to leverage its sizable balance sheet to further its growth and enhance future dividends to shareholders.

“When we look into the future, we are confident that we have repurposed and retooled ourselves to speak to changing demographics and technology. We have ended the year well-positioned to rebuild with a Ksh.1 trillion balance sheet, enjoy economies of scale from our nearly Ksh.500 billion in liquid assets,” James Mwangi added.

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