Equity Group projects a significant impact of South Sudan’s political instability on the bank’s 2016 earnings after deposits recorded by the subsidiary dipped by 69 per cent during first half of the year.
Group CEO James Mwangi issued the caution yesterday despite the lender posting an 18 per cent rise in net profit between January and June.
Equity’s profit after tax rose to Sh10.1 billion from Sh8.6 billion over the same period in 2015, the lender announced yesterday, attributed to “increased investment in government securities coupled with growth in the loan book”.
Consolidated deposits for the six subsidiaries in Kenya, Uganda, DR Congo,Tanzania, Uganda, Rwanda and South Sudan grew by seven per cent to Sh320.8 billion from Sh301 billion.
Politically instigated chaos and tension in South Sudan caused a plunge in deposits to Sh10.3 billion from Sh33.3 billion in 2015.
“Unfortunately the peace deal is seen not to have delivered expected results. This year it will affect performance of the group but next year will not have an impact,” Mwangi said during the half-year investor briefing yesterday held in Nairobi.
The group’s total assets closed at Sh444.4 billion from Sh401 billion in 2015, an 11 per cent growth.
The bank recorded a 14 per cent growth in net loan book to Sh269 billion from Sh236.8 billion. Customers increased by 10 per cent from 9.7 million, and they hold 10.7 million accounts.
This was driven by the growth in the Equitel mobile platform through which loans totaling Sh20.8 billion were disbursed, accounting for 82 per cent of total loan book compared to 18 per cent over-the-counter branch loans.
“The convenience and ease of accessing credit and loans through the Equitel mobile channel saw the number of loans disbursed increase by 308 per cent to 4,327,999 up from 1,061,000, out of which 3,557,913 were disbursed through Equitel mobile channel,” Mwangi said.
Equity Bank Kenya’s year-on-year investment in government securities grew to Sh73 billion from Sh50.6 billion in a similar period in 2015.
Customer deposits in Kenya grew by 10 per cent to Sh259 billion from Sh236.4 billion.
Mwangi also attributed the gains to agency banking, merchant and internet banking.