Equity Bank’s Profits For Q1 Dip By 14 Percent

Equity Bank has so far restructured 92 billion shillings or 25.1 percent of its loan book due to the pandemic. The bank also shocked the shareholders when it decided to recall the proposed dividend payout of 2.50 shillings per share or a total of 9.4 billion shillings to conserve cash as the coronavirus bites.

The withdrawal of the dividend was a shocker to investors but given the performance of 1Q20. “We see the need for building its capital buffers as the economy struggles under the pandemic,” said analysts from Genghis Capital.

“The global COVID 19 pandemic has mutated into a global economic crisis, occasioned by a sudden standstill of economic activity as a result of the global lockdown. This has introduced unprecedented uncertainty within the global financial systems prompting us to adopt a conservative approach fortifying our balance sheet and assuring ample liquidity to support our customers,” said Equity chief executive James Mwangi.

Operating expenses before provisions rose 16.3 percent y/y driven by 26.9 percent increase in staff costs to 3.3 billion shillings while other operating expenses rose 12.3 percent y/y to 6.4 billion shillings.

With the rising income levels and increasing value of non-branch transactions, the bank can leverage its mobile, online, agency and digital platforms to push the branch numbers down further as management envisages the branches as points of serving high-value transactions for SME, corporates, wealth management, and advisory.

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