Equity Group’s Q1 2025 Earnings Snapshot

Equity Group released its 1Q25 results, reporting a 4.2% y-o-y decline in after-tax profits to KES 15.3 BN. This was mainly attributed to an 11.8% y-o-y decrease in non-funded income to KES 19.6 BN against a 2.6% y-o-y growth in net interest income to KES 28.6 BN. EPS for the period stood at KES 3.92 (1Q24: KES 4.08).

Key highlights:

Net interest income grew by 2.6% y-o-y to KES 28.6 BN, characterized by a 2.7% y-o-y decrease in total interest income to KES 41.9 BN against a 12.4% y-o-y rise in total interest expenses to KES 13.3 BN.

Non-funded income went down by 11.8% y-o-y to KES 19.6 BN, principally driven by a 29.9% y-o-y drop in net income from forex dealings to KES 2.7 BN and a 1.1% y-o-y decrease in other fees and commissions to KES 10.8 BN. Fees and commissions on loans and advances declined by 2.7% y-o-y to KES 2.7 BN, while other operating income dropped by 27.0% y-o-y to KES 3.5 BN. The contribution of non-funded income to total income decreased by 371 bps y-o-y to 40.7% (1Q24: 44.4%).

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Operating expenses (excluding provisions) climbed by 10.7% y-o-y to KES 26.1 BN, largely buoyed by an 11.1% y-o-y rise in other expenses to KES 15.0 BN and a 10.8% y-o-y advancement in staff costs to KES 8.7 BN. The group’s cost-to-income ratio (excluding provisions) rose by 710 bps y-o-y to 54.2% (1Q24: 47.1%).

Loan loss provisions declined by 44.4% y-o-y to KES 3.4 BN as gross non-performing loans for the group advanced by 10.3% y-o-y to KES 132.8 BN (+8.8% q-o-q). The NPL ratio increased by 78 bps y-o-y to 14.2%.

Net loans and advances rose by 3.3% y-o-y to KES 804.7 BN (-1.8% q-o-q) in comparison to a 15.9% y-o-y rise in government and investment securities to KES 548.3 BN (+7.1% q-o-q). On the funding side, customer deposits improved by 7.0% y-o-y to KES 1.3 TN (-5.5% q-o-q) while borrowed funds decreased by 35.0% y-o-y to KES 71.2 BN (+1.0% q-o-q).

On a trailing basis, Equity Group is currently trading at a P/E multiple of 3.6x against an industry median of 3.6x and a P/B multiple of 0.7x against an industry median of 0.7x. Its ROE stands at 18.3% while its ROA stands at 2.6%.

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