Equity Group has registered a record 46.1 billion shillings in net profits for the financial year ended December 2022, an increase of 15 percent from 40.07 billion shillings the previous year. Equity Group now becomes the most profitable bank in the region.
Interest and non-interest income growth contributed to the massive profits with the lender’s loan book expanding from 587.78 billion shillings to 706.59 billion shillings. Equity Bank Kenya contributed 33.4 billion shillings of the group’s net profits, even as its subsidiaries in markets such as DR Congo continued to grow.
“Equity is not about numbers. It is a human story built to solve problems in society. But this human story manifests itself in numbers. It is a story of consistency,” said James Mwangi, Group CEO at Equity. The lender has declared a dividend of Sh4 per share, a 33 percent rise from the Sh3 that was paid last year.
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Operating costs for the lender rose from 61.5 billion shillings to 86.09 billion shillings as Equity Bank increased provisioning for loan defaults and spent more on paying staff. Provisioning for loan defaults tripled from 5.84 billion shillings to 15.4 billion shillings, while staff costs jumped from 19.11 billion shillings to 24.78 billion shillings.
“We have strengthened our bench (by hiring more staff). And also, when you are doing well, you have to pay them well. That explains why the staff costs have gone up. We are willing to pay for competency,” said Mr. Mwangi.
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Equity’s increased payout to shareholders is the latest indication that investors in listed banks are set for record cash returns after booking lower income in the 2020 and 2021 financial years.
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“The COVID-19 environment acted as a tailwind for business transformation through innovation and digital adoption. 97 percent of all Group transactions are on customer self-service on their own devices driving efficiency gains, ease and convenience to customers, and reduction of fixed and variable costs. The Group’s latest breakthrough is digital e-Commerce payments through Pay with Equity (PWE) rails following the wave of mobile and internet banking usage by customers” Dr. Mwangi added.
During the month, in its second consecutive appearance in the Brand Finance Banking 500 rankings, Equity climbed one place to 4th position in the World’s Top 10 Strongest Banking Brands with a Brand Strength Index score of 92.4 out of 100 and an elite AAA+ brand strength rating. This marks a 1.6 points BSI improvement on its 2022 debut ranking.
The Bank also climbed an impressive 47 places in its brand value ranking to position 291 from last year’s 338 after recording a significant growth in brand value to USD 531.7 million from USD 338 million in 2022.