Equity Bank’s Profit Before Tax Grows by 16 % in 6 Months

Equity group has recorded an 18 percent growth to 11 billion shillings up from 9.4 billion shillings for the same period in 2017. Profit before tax grew by 16 percent to get to 15.5 billion shillings up from 13.3 billion shillings.

Equity group has posted a growth of 7 percent reaching 542 billion shillings from 505 billion shillings.

The growth was driven by customer deposits of 9 percent to reach 394 billion shillings from a previous 363 billion shillings.

Regional subsidiaries share of group assets increased to 26 percent up from 23 percent as their assets grew by 21 percent reaching 142 billion. International lenders increased their long-term funding to the group by 16 percent to get to 53 billion shillings from a previous 46 billion showing the global lender confidence in the group’s risk.

Equity’s deployment of funding was underpinned by investment in government securities which marked a 37 percent growth to hit 159 billion shillings from 116 billion shillings while customer’s net loans grew by 4 percent to reach 275 billion shillings up from 265 billion shillings. This has reflected the effects of interest capping in Kenya when it comes to lending to the private sector.

The Group’s balance sheet reflects a liquidity of 59.4 percent from 54.4 percent.

Regional subsidiaries grew their profits by 62 percent hitting 2.8 billion shillings and improving their contribution to the Group’s profitability to 18 percent from 13 percent.

Interest income grew by 10 percent to reach 25.4 billion up from 23 billion driven by investment in government securities that grew by 37 percent and loans and advances growth of 4 percent. Non-funded income fees and commissions grew by 2 percent primarily driven by 29 percent growth in trade finance income, 23 percent growth in merchant banking commission, 27 percent growth in forex capital gains, 35 percent growth in swift and RTGs income , 54 percent growth in bond trading income and 165 percent growth in Diaspora remittances income.

Innovation and digitization have contributed to efficiency gains and cost optimization that has seen the Group’s total expenses declining by 2 percent from 17.6 billion shillings to 17.3 billion shillings.

Equity’s cost to income ratio has declined from 51percent to 50 percent despite interest capping in Kenya that has seen the Group’s yield on interest-earning assets remain at 11 percent. The Group’s return on average assets increased to 4.1 percent up from 3.8 percent and return to average Equity increased to 24.5 percent up from 22.3percent.

The Group’s NPLs ratio moved from 7.3 percent to 8.4 percent but remained better than the Kenyan banking NPLs sector average of 12 percent. Loan loss provision grew by 22 percent from 7.8 billion shillings to 9.5 billion shillings consequently.

NPL coverage moved to 79.9 percent in Q2 2018 from 105.1percent in Q1 due to a slight increase in the non-performing loans (NPLs). The non-performing loans (NPLs) grew as a result of stress in the large enterprises. This was occasioned by the timing difference arising from late and delayed payment to contractors and service providers by the County and Central governments.