Equity Bank’s Profit After Tax Hit Ksh 12.8 Billion For Q1

Equity Group has registered a 21% growth with total assets reaching Kshs.1,537.7 billion. Funding the asset growth is a 23% growth in customer deposits with the proceeds deployed to grow loan the book by 21%.

Customer deposits grew to Kshs.1,111.2 billion up from Kshs.900.9 billion while the loan book grew to Kshs.756.3 billion up from Kshs.623.6 billion.

 “The strong growth speaks to the Group’s embedded social and trust capital that has seen the Group’s brand rated the 4^th strongest financial brand on Earth. We are working to anchor the strength of the brand on customer experience, its capabilities, and superior product offering,” Dr. James Mwangi, Equity Group Managing Director, and CEO said.

Related Content: KCB Overtakes Equity As Kenya’s Largest Bank With Ksh 1.55 Trillion Assets

The Group’s regional expansion and product diversification strategy has delivered an almost 50:50 split of business between the anchor Kenya business and the regional banking subsidiaries and non-banking business.

The Group’s business has recorded recovery and growth momentum after the tough COVID-19 operating environment. The value of transactions in branches has grown by 40% to 990.5 billion up from 708.3 billion transactions. The value of transactions on Agency channels has grown by 44% to 681.6 billion transactions, up from 472.3 billion transactions.

“The COVID environment acted as a tailwind for digital transactions adoption by our customers and we have emerged out of the 3-year pandemic period as a strong digital business,” said Dr. Mwangi.

The fintech/digital capabilities of the Group continued to be strengthened by the successful rollout of the interoperable universal digital payments platform, Pay with Equity (PwE), whose transactions volume grew by 243% to 48.3 million transactions up from 14.1 million transactions. Mobile and Internet banking transactions grew by 270% to 1,336.3 million transactions up from 361.6 million transactions. Transaction income grew by 73% to Kshs.4,119.6 million up from Kshs.2,388 million.

Related Content: Safaricom, Equity, And KCB Named Kenya’s Biggest Brands

The Group registered a Profit After Tax growth of 8% of Kshs.12.8 billion, up from Kshs.11.9 billion. Profit Before Tax grew by 10% to Kshs.16.9 billion up from Kshs.15.3 billion.

Profitability was driven by the non-funded income of Kshs.18 billion up 57% from Kshs.11.5b billion, which contributed 45% of total income reflecting the improving quality of Group earnings.

Gross trade finance income grew by 100% to Kshs.2.4 billion up from Kshs.1.2 billion while Trade finance guarantees and off-balance sheet volume grew by 39% to Kshs.167 billion up from Kshs.120 billion. Forex income registered a growth of 160% to Kshs.5.2 billion up from Kshs.2 billion.

Despite the 57% growth in non-funded income, total income grew by 28% to Kshs.39.7 billion up from Kshs.30.9 billion as a result of slow growth in interest income of 21% to Kshs.32.4 billion up from Kshs.26.7 billion, while the corresponding interest expenses grew by more than double the rate of interest income growth at 47% to Kshs.10.7 billion up from Kshs.7.3 billion. Yields on interest-earning assets increased to 10.3% up from 9.5% but net interest margin stagnated at 6.8% as a result of the increase in the cost of funds which grew to 3.5% up from 2.7%. The increase reflects the challenging macroeconomic operating environment characterized by stubbornly high inflation and high-interest rates.

Further to the slow growth in net interest income of 12% due to the slower growth in interest income of 21% compared to the 47% growth in interest expense, the business was not spared by growth in total costs which grew by 46% to Kshs.22.8 billion up from Kshs. 15.6 billion. The costs were primarily driven by 127% growth in loan loss provision of Kshs.3.1 billion up from Kshs.1.4 billion, staff cost growth of 33% to Kshs.6.6 billion up from Kshs. 5.0 billion and other operating expenses growth of 42% to Kshs.13.1 billion up from Kshs. 9.2 billion.

Related Content: Equity Group Makes Ksh 46 Billion In Net Profits For 2022