Equity quarterly profit rises by 62 per cent to Ksh.8.6 billion

Lender Equity Group has posted a 62.3 per cent growth in earnings through the first quarter to March with profits hitting Ksh.8.6 billion from a lower Ksh.5.3 billion last year.

The remarkable surge in profitability is anchored primarily on greater operational income margins and a cut to costs.

Equity’s net interest income rose by 28.7 per cent to Ksh.14.8 billion from Ksh.11.5 billion.

This is as the Group’s interest income before expenses hit Ksh.20.3 billion from a lower Ksh.15.4 billion at the same stage in 2020.

Similarly, the lender’s non-interest based income rose by 31.3 per cent to Ksh.10.9 billion pushing the Group’s total operating income to Ksh.25.7 billion from Ksh.19.9 billion.

The Group’s total operating expenses grew by a slower 8.5 per cent to Ksh.14 billion with the bank cutting its cover for bad loans by Ksh.1.8 billion in the three months period to Ksh.1.3 billion.

The trim in loan-loss coverage is nevertheless against a rise to gross non-performing loans which now stand at Ksh.63.5 billion.

However, Equity’s exposure to bad loans remains below the industry average at 11.3 per cent with the lender covering about 99 per cent of its non-performing loans (NPLs) in its books.

Equity Group Managing Director James Mwangi has termed the strong performance in the quarter to a marker of the lender’s strength.

“I would sum up our performance in two words, resilient and sustainable. The highlights of our performance are in the midst of multiple crisis. Our performance has informed the revision of our 2021 outlook reflecting the confidence of the board and management of the Group,” he said.

During the period, Equity’s loan book grew by a notable 29 per cent to Ksh.487.7 billion against a deceleration in new lending to business which saw the rate of private sector credit growth plummet to 7.7 per cent, its lowest level since October 2020.

Equity Group asset base ended the quarter with a value of Ksh.1.07 trillion having expanded by 54 per cent on the backdrop of the amalgamation of BCDC in the DRC into its balance sheet, its latest acquisition competed in the second half of last year.

Similarly, Equity deposit base was up 58 per cent in the quarter to Ksh.789.9 billion.

Subsequent to the accelerated profitability, Equity Group’s earnings per share have improved to Ksh.2.29 from Ksh.1.41 in March last year.