A Look At Equity Group Summary Of Performance For 2020

Equity Group released its financial results for the year 2020. Profit before tax declined by 29.6 percent to 22.2 billion shillings, from 31.5 billion shillings in FY’2019. Profit after tax declined by 10.9 percent to 20.1 billion shillings from 22.6 billion shillings.

Total operating income rose by 23.6 o percent to 93.7 billion shillings, from 75.8 billion shillings recorded in FY’2019.

This was driven by a 25.1 percent increase in NonFunded Income (NFI) to 38.5 billion shillings, from 30.8 billion shillings in FY’2019, coupled with a 22.6 percent increase in Net Interest Income (NII) to 55.1
billion shillings, from 45.0 billion shillings in FY’2019.

Total operating expenses grew by 64.1 percent to 20.0 billion shillings in FY’2020, from 16.5 billion shillings recorded in FY’2019, mainly driven by the 402.2 percent increase in Loans Loss Provision to 26.6 billion shillings, from 5.3 billion shillings recorded in FY’2019. The increased provision level was on the back of the subdued operating environment is seen during the year.

The balance sheet recorded an expansion as Total Assets increased by 50.7 percent to 1,015.1 billion shillings, from 673.7 billion shillings recorded in FY’2019.

The bank’s asset quality deteriorated, as evidenced by the 2.0 percentage points rise in the NPL ratio to 11.5 percent in FY’2020, from 9.5 percent in FY’2019.

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The main sectors that contributed to the deterioration in asset quality were SMEs and large enterprises sectors, which contributed the largest portion of the Non-Performing loans with NPL Ratios of 15.5 percent and 9.1 percent, respectively.

Going forward, we expect the bank’s growth to be driven by:

Channeled diversification is likely to further improve on efficiency with emphasis on alternative channels of transactions, as the bank rides on the digital revolution wave, thereby further improving the cost to income ratio by cost rationalization and revenue expansion.

This will likely propel the bank’s prospects of achieving sustainable growth, as it replicates its successful business model across its various regional subsidiaries.