Equity Group Holdings grew its loan book by 26% from Ksh673.9 billion to Ksh845.9 billion in the third quarter of 2023 despite the difficult economic environment prevailing in Kenya.
“It was a strategic decision to support and cushion our customers to fortify their opportunities for survival and enhance their resilience during these difficult economic times by absorbing part of the funding costs and keeping yields on loans and government securities at almost the same level at 12.1% and 11.5% respectively,” said Dr James Mwangi, Equity Group Managing Director and CEO, while releasing the group’s financial results for quarter 3 sending 31st September.
The Group said profit after tax grew by 5% to Ksh36.2 billion up from Ksh34.4 billion with Kenya contributing 50% with an equivalent contribution of 50% coming from the subsidiaries driven by a growth of 142% in DRC, 23% in Uganda, 46% in Rwanda, 136% in Tanzania and 177% by Equity Life Assurance Kenya.
Revenue registered a 28% growth with Kenya contributing 50% after a 13% growth as subsidiaries contributed 50% driven by strong revenue growth of 81% in DRC, 33% in Uganda, 38% in Rwanda and 203% for Equity Life Assurance Kenya. Non-funded income registered robust growth of 38% to Ksh56.5 billion up from Ksh41.1 billion as net interest income grew by 21% to Ksh72.6 billion up from Ksh59.8 billion allowing non-funded income to contribute 43.8% of the total income of Ksh129.1 billion up from 40.7% the previous year.
As a result of interest expense growing faster at 58% than interest income that grew by 32%, net interest income grew slower at 21%, while non-funded income grew at 38% to deliver a 28% growth in total income. Total costs grew by 47% as the Group opted to absorb the impact of global and regional inflation and depreciation of local currencies that saw staff expenses grow by 33% and other operating expenses by 38%.
While the cost of funding and deposits rose by 35% and total operating costs grew by 47%, yields on loans increased by 7% only from 11.3% to 12.1% as we focused on cushioning customers to enhance their chances of survival and resilience. Loan loss provision grew by 107% from Ksh8.6 billion to Ksh17.7 billion to strengthen the NPL provisions coverage buffers. Consequently, profit after tax grew by 5% to Ksh36.2 billion up from Ksh34.4 billion.
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Dr Mwangi said the long-term strategic pursuit of geographical expansion and diversification continues to deliver impressive results. Group deposits grew by 20% to Kshs1,208.6 billion up from Kshs. 1,007.3 billion with Kenya contributing 51% after a growth of 4% while subsidiaries contributed a 49% growth driven by deposit growth of 28% in DRC, 32% in Uganda, 39% in Rwanda and 56% in Tanzania.
Loans grew by 26% to Ksh845.9 billion up from Ksh673.9 billion with Kenya contributing 54% after a growth of 8% while subsidiaries contributed a 46% growth reflecting strong growth of 71% in DRC, 40% in Uganda, 33% in Tanzania and 20% in Rwanda. Total assets grew by 24% to Ksh1,691.2 billion up from Ksh1,363.7 billion with Kenya contributing 53% after a growth of 11% and subsidiaries contributing 47% driven by 31% growth in DRC, 34% growth in Uganda, 40% growth in Rwanda, 44% growth in Tanzania and a 63% growth by Equity Life Assurance Kenya.