Equity Bank this morning announced a 42% growth in profit before tax to Kshs12.83 billion from Kshs9.04b in 2010. The growth during a time when the economy was characterised by high interest rates, high inflation and volatile exchange rates.
The company attributed its remarkable growth to a continued focus on ICT, innovation in delivery channels and investment in mobile telecommunications banking and agency banking. Despite these micro economic challenges, Equity’s loan book grew by 45% to Kshs 113.8 billion in 2011, a result of having held on increasing their loan interest rate until mid November, eventually capping it at 25% compared to the industry average of 32%.
The Bank’s customer base also grew in 2011 by 1.3 million customers, an increase that is equivalent to the overall customer base of some banks in Kenya, making it the largest bank in East Africa in terms of customer numbers with a total of 7.15 million customers. Equity Bank MD James Mwangi said that despite higher interest rates, loans had increased by 45% to Kshs113.8b in 2011, which he directly attributed to the impact of their SME portfolio.
Interest income on loans increased by a commensurate 46%, which Mr Mwangi explained as the “feel good factor” in the relationships that Equity had developed with its customers.
“Our customers are willing to pay back their loans,” he said. The Bank also announced an enhancement of its board membership and management team suggesting a renewed focus on innovation, risk management, SMEs and the health sector in 2012. The company declared a dividend per share of Kshs 1, as compared to Kshs 0.80 in 2010. Despite their strong performance, Equity Bank’s stock price fell by 2.8% to Kshs 19 by the close of trading today.
