BANK PROFIT

Equity Group posts Sh17.46bn profit after tax over lending

Loans and advances to customers grew by Sh60.5 billion to Sh348.9 billion in three months to September

In Summary

• About 67 per cent of the loan portfolio is spread in financing trade, housing, energy, water, transport and communication, tourism, restaurants and hotels.

• Investments in government securities decelerated to only grow by five per cent as more funds were reallocated to lending to the real economy.

Equity Group Managing Director and CEO Dr James Mwangi gives his address during the release of Q3 results at Equity Centre, Upper hill, Nairobi on Tuesday, November 12, 2019.
Equity Group Managing Director and CEO Dr James Mwangi gives his address during the release of Q3 results at Equity Centre, Upper hill, Nairobi on Tuesday, November 12, 2019.
Image: COURTESY

Equity Group has registered a 10 per cent growth in profit after tax to Sh17.46 billion from Sh15.83 billion in the third quarter supported by increased interest from lending.

The Group’s net interest income grew by 10 per cent to Sh32.29 billion from Sh29.47 billion in the three months to September.

Loans and advances to customers grew by Sh60.5 billion to Sh348.9 billion up from Sh288.4 billion reflecting a growth of 21 per cent.

About 75 per cent of this loan portfolio was held by enterprises spread in financing trade, housing, energy, water, transport and communication, tourism, restaurants and hotels.

“This was supported by the Young Africa Works partnership between Equity Group, Mastercard Foundation and the Kenya government whose objective is creating 5 million decent jobs for young people,” Group chief executive James Mwangi said.

The program has seen 5,740 young people and women go through a 13-week financial education training program while 6,275 enterprises have commenced a three-year entrepreneurship education program since June 2019.

The Group’s balance sheet grew by to Sh677 billion up from Sh560.4 billion driven mainly by 21 per cent growth in net loans and 40 per cent growth in cash and cash equivalent.

Investments in government securities decelerated to grow only by five per cent as more funds were reallocated to lending to the real economy.

Non-funded income grew by 14 per cent to Sh22.54 billion up from Sh19.83 billion to lift total income by 11 per cent to Sh54.83 billion up from Sh49.3 billion.

"The faster growth in total income above net interest income reflects the success of the strategic pursuit of the Group to grow quality income through non-funded income growth," Mwangi added.

The assets were funded by a growth of 19 per cent in deposits which rose to Sh478.1 billion up from Sh402.2 billion.

Shareholders’ funds have grew by 20 per cent to Sh108.7 billion up from Sh90.7 billion while long-term funding grew by 18 per cent to Sh66.3 billion reflecting a stable diversified mix of funding.

The Group’s cost to income ratio improved to 51.3 per cent from 51.5 per cent driven by a faster improvement in the cost to income ratio of the main subsidiary Kenya to 45.9 per cent from 47 per cent.

The improvement in the cost-income ratio is underpinned by efficiency and cost optimization driven by innovation and digitization in the bank.

Equity Bank has said about 97 per cent of all transactions happen outside the branch while 93 per cent of all the Group loan transactions are via the mobile channels.


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