Equity Group To Pay Ksh 15.1 Billion In Dividends To Shareholders

By Soko Directory Team / Published March 27, 2024 | 6:12 pm



Equity

Equity Group Holdings has proposed a record dividend of Kshs.15.1 billion for a second year running. While releasing the 2023 full-year financial results Dr. James Mwangi, Group Managing Director and CEO said.

“The Kshs. 4 per share dividend amounts to a 36% payout of the Kshs.43.7 billion Profit After Tax or Kshs 11.1 earnings per share and a dividend yield of 11.9% on the 2023 year-end closing share price of Kshs.33.65 or 800% on par value.”

The performance reflected strong momentum as net interest income grew by 21% to Kshs.104.2 billion up from Kshs.86 billion while non-funded income registered an impressive 30% growth to Kshs.75.9 billion up from Kshs 58.3 billion.

Gross trade finance revenue grew by 90% to Kshs.11 billion from Kshs 5.8 billion driven by a 106% growth of trade finance-related ending and 26% growth of trade finance guarantees and off-balance sheet items.

Total costs grew by 52% to Kshs.128.2 billion up from Kshs 84.5 principally driven by a 139% growth in loan loss provision of Kshs 32.8 billion up from Kshs.13.7 billion to strengthen asset quality buffers. Other operating expenses and staff costs grew by 39% and 28% respectively driven by high inflation and depreciation of the Kenya shilling.

Return on average equity stood at 22.3% against an 18% cost of capital. Profit After Tax declined by 5% to Ksh 43.7 billion down from Ksh 46.1 billion as a result of interest expense growing at 53% compared to a 30% growth rate of interest income.

Gross balance sheet grew by 26% to Kshs.1.821 trillion up from Kshs 1.447 trillion driven by 29% growth in customer deposits to Kshs 1.358 trillion from Kshs 1.052 trillion. Shareholders’ funds grew by 20% to Kshs.218.1 billion up from Kshs 182.2 billion. Deployment of funding saw net loans grow by 26% to Kshs.887.4 billion up from Kshs.706.6 billion while government securities holding grew by 27% to Kshs.500.5 billion up from Kshs.394 billion as cash and cash equivalent grew by 25% to Kshs.290.1 billion up from Kshs 232.4 billion.

The Group business has demonstrated resilience after multiple shocks, interest capping, the COVID-19 global health pandemic, global supply chain disruptions, the Russia/Ukraine war, and global macro-economic headwinds exemplified by FX volatility, high inflation, and high-interest rates over the last 7 consecutive years. During this turbulent period the number of customers has grown to 19.6 million up from 10.4 million, customer deposits have grown to Kshs.1.358 trillion up from Kshs.303.2 billion while the loan book has grown to Kshs.887.4 billion up from Kshs.269.9 billion.

Total assets have grown to Kshs.1.822 trillion up from Kshs.428.1 billion as shareholders’ funds grew to Kshs.218.1 billion up from Kshs. 72.1 billion.

Over the last unprecedented 7 years of turbulence, the Group has treaded softly yet boldly pursuing the twin strategy of being offensive while remaining defensive. The Group has intensified and strengthened its risk management governance framework and a value-based organizational culture that emphasizes human interactions and attitudes, norms, and practices that drive an innovative, customer-centric approach, strong compliance, and a prudent risk management culture.

The Group registered a PAR of 11.7%, a slight improvement from 12.2% at the end of the 3rd quarter and favorably compared with 14.8% industry NPLs. Dr. Mwangi pointed out that, “The NPL trend is consistent with management’s view as at the investors 3rd quarter briefing that NPL had peaked. Prudent risk management culture led the board to approve a proactive derisking of future performance by providing for the lifetime expected loss on outstanding NPLs and increasing loan loss provision by 139% to Kshs.32.8 from Kshs.13.7 billion driving cost of risk to 4.4% while increasing NPL coverage to 67.3%.”

Deep purpose, a consistently strong risk management culture, and a vibrant value-based organization culture have supported the evolution and development of the Group brand to achieve recognition and accolades such as the Oslo Business for Peace Award and the 2nd Strongest Global Banking brand by Brand Finance. IFC, the Private sector arm of the World Bank has recognized Equity as the bank with the highest number of green financing loans for climate mitigation and adaptation worldwide.

The defensive strategy adopted by the Group has seen it register strong risk buffers of 53.4% liquidity, relatively strong asset quality with strong NPL coverage, and strong capital buffers. The total capital-to-risk weighted asset ratio of 18.1% reflects a buffer of 3.6% above the minimum capital requirement of 14.5% while the core capital-to-risk weighted asset ratio stood at 14.3%, a buffer of 3.8% above the legal requirement of 10.5%. The Group is well-capitalized and strategically positioned for its offensive growth strategy.

Read Also: Equity Bank Named The Most Loved Brand By Kenyan Women




About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system.Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

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