99% Of Equity Bank’s Transactions Now Happening Outside The Branch

Equity Group’s half-year results continue to reflect a sustained digital transformation with 99% of all customer transactions now happening outside the branch network.

“Covid-19 acted as a tailwind to our efforts of digitizing our business,” said Dr. James Mwangi, Group Managing Director, and CEO while releasing the results.

The Group’s recovery and resilience strategy saw the Group’s profit after tax grew by 36% to Kshs 24.4 billion up from Kshs 17.9 billion for the comparative half-year results of the previous year.

The profit growth was principally driven by a 29% growth in interest income to Kshs 55 billion up from Kshs 42.8 billion as a result of the growth of loans to customers by 29% to Kshs 650.6 billion up from Kshs 504.8 billion.

“The loan growth was targeted to supporting our clients to recover and rebuild after the Covid-19 business disruptions while allowing re-purposing and retooling for resilience and agility to take advantage of emerging opportunities and green shoots in the real economy, “said Dr. Mwangi.

The differentiated strategy adopted by management to support borrowers to cope with the difficulties of Covid-19 business disruptions has seen most of the businesses survive and recover.

Out of Kshs 171.4 billion Covid-19 restructured loan book, Kshs 46.6 billion has been fully repaid, and a further Kshs 114.0 has resumed repayment, with only Kshs 8.1 billion non-performing.

Out of the remaining Kshs 11 billion which is anticipated to resume repayment within the next six months, only Kshs 2.7 billion is showing the strain of recovery.

The Group’s culture of customer centricity and focus informed the management’s Covid-19- environment strategy of focusing on customers’ recovery and resilience. Targeted lending reflected by the 29% growth of the loan book is part of the strategy to sustain recovery, and growth and allow the real economy to thrive and brighten the lights of the economy by generating growth opportunities.

In pursuit of resilience and prudence, management has fully provided for the entire Kshs 8.1 billion Covid-19 books that have resumed repayment and are non-performing while proactively downgrading Kshs 2.7 billion of the remaining restructured book.

The success of the recovery and resilience strategy is reflected by the decline in NPL ratios to 8.5% compared to 10.7% the previous year. The Group’s 8.5% NPL positively and favorably compares to Kenya’s banking industry NPL ratio of 14.7% as of 30^th June 2022.

The Group’s NPL coverage stands at 94%. NPL coverage inclusive of credit risk guarantees stands at 119.8% and the cost of risk has normalized to pre-Covid rates of below 1.5%.

The Group continues to prudently hedge against default through a loan book diversification strategy across market segments, with large enterprises holding 26%, SMEs 43%, consumers 20%, agriculture 8%, and micro enterprises 3% of the loan book.

Group loan book diversification currently reflects 45.9% in US dollars and 54.1% in local currencies. Geographical sovereign risk diversification has Kenya holding 65%, DRC 19.6%, Uganda 7.3%, Rwanda 4.4%, Tanzania 3.6%, and South Sudan 0.1%.

Over the last three years during the Covid-19 pandemic, Equity Group has gone through its greatest business transformation in line with the environmental challenges. “Equity Group had adopted a strategy of business transformation through digitization to offer customers a more online business experience offering ease and convenience.

Digitization compresses time and geography, transforming Equity banking experience from where you go, to what you do on your own devices, whatever time, wherever you are, a truly 24 hours banking experience.” While our agility and flexibility allowed us to increase our software engineers by 600 new staff and our Chief Information Officers to 17 from one, Covi