Equity Bank recorded a 4.83 billion net profit, which is a 6.1 percent for the three months to March 2017. The Banks net profits for the first quarter last year stood at 5.13 billion.
According to Equity Banks’ Group chief executive officer James Mwangi, the drop came about as a result of a tough operating environment, citing the rate caps on customer loans.
The bank also recorded a 13.1 billion shilling drop in its loan book to 261.8 billion shillings during the quarter.
“A cautious approach in credit underwriting because of inability to price risk saw the loan book declined by 5 percent from 275 billion shillings to 262 billion shillings,” said James Mwangi.
Equity’s net interest income from customer loans shrunk by 37.1 percent to Sh8.1 billion in the period.
The CEO also noted that the increase in funding was invested in government securities which on a risk-adjusted basis currently yields similarly to loans, and yielded about 12 percent.
“Government securities grew by 81 percent from 62 billion shillings to 113 billion shillings with the highest growth experienced in the Kenyan market where government securities grew by 154 percent from 42 billion shillings to 105 billion shillings,” added Mwangi.
The lender’s non-interest income went up 17.6 percent went up to Sh6.3 billion shillings. The loan loss provisions increased by 11.5 percent to Sh796.9 million shillings in the quarter with its non-performing loan portfolio rising by 44 percent to Sh19.5 billion shillings. Its interest expenses went up 5 percent to 2.57 billion shillings.
Mr. Mwangi disclosed that they would continue focusing on digital banking to drive growth and cut costs, adding that regional subsidiaries, with the exception of South Sudan, would anchor growth of its business in the long term.