Equity posts Sh34.4b net profits in Q3

Wednesday, November 23rd, 2022 03:50 | By
Equity Group Foundation executive chairman James Mwangi PHOTO/COURTESY
Equity Group Foundation executive chairman James Mwangi PHOTO/COURTESY

Equity Group made an average of Sh3.3 billion every month for the three months across the third quarter ending September to post 34.4 billion net profit,  marking a 21.8 per cent growth compared to the previous year.

The growth was attributed to a 26 per cent increase in total interest income of Sh84.16 billion since September 2021.

Interest incomes from loans and advances, investments in government securities, and deposits also generated good for the lender.

During that period, the bank’s customer deposits surpassed the Sh1 trillion mark, the first in East Africa to reach the milestone, beating close rivals such as KCB bank and Cooperative bank.

An increase in customer deposits always gives banks buffer capital to finance lending activities. The bank’s increase in deposits could also signal a gradual improvement of business activities, following the economic recovery and election conclusion in Kenya

“Deliberate and intentional strategic decisions have delivered better performance and quality income mix and stronger balance sheet,” said Dr. James Mwangi the Group CEO and Managing Director at an investors briefing yesterday.

Equity Group recorded a 15 per cent growth in assets to Sh1.36 trillion total assets partly driven by the surge in customer deposits and is among the top three banks that are expected to record an average Return on Assets (RoA) of 3.8 per cent, the highest since 2016, according to rating agency Moody’s.

The agency attributes the RoA growth to higher interest earnings and the efficiency of local banks due to digitisation.

Loans and advances grew by 21 per cent to reach Sh673.9 billion in nine months to September 2022.

Non-funded income grew to Sh42.2 billion derived primarily from fees and commissions income on loans, bonds, and forex trading income.

Trade financing grew 84 per cent to Sh36.2 billion up from Sh19.7 billion while trade finance guarantees and off-balance sheet items grew by 39 per cent to Sh156.2 billion up from Sh112.3 billion.

Non-performing loans

However, the bank’s total non-performing loans (NPLs) increased to Sh53.7 billion as households and businesses still struggle to repay loans on the back of uncertain economic and financial environment. Equity however maintains that its capital buffers remain strong with the core capital to risk-weighted asset ratio standing at 16.1 per cent against the statutory minimum of 10.5 percent.

“The group is now realigning people, systems, processes, business, business risk through strong governance structures as it rolls out the African Recovery and Resilience Plan envisaged to grow the customer base to 100 million with 5 million businesses and 25 million households and individual borrowers,” added Dr. Mwangi.

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