Equity Group braved low-interest regime and a slowing economy to push net profit up for the nine months to 30th September 2019.
Results released on 12th November showed Equity Group returned a profit of Ksh17.46 billion, up from Ksh15.58 billion in a similar period a year ago, representing a 10% growth.
Growing revenue streams
Earnings were boosted by the loan book, with increased lending to enterprises expanding by 21%. Loans and advances to customers grew by Ksh 60.5 billion to Ksh348.9 billion up from Ksh 288.4 billion reflecting a growth of 21%.
About 75% of the loan portfolio is held by enterprises, while 67% is spread in financing trade, housing, energy, water, transport and communication, tourism, restaurants and hotels.
Equity Group’s balance sheet grew by 21% to Ksh677 Billion up from Ksh560.4 billion driven mainly by 21% growth in net loans and 40% growth in cash and cash equivalent. Investments in government securities decelerated to only grow by 5% as more funds were reallocated to lending to the real economy.
Equity’s net interest income grew by 10% to Ksh32.29 billion from Ksh29.47 billion. Non-funded income went up by 14% to Ksh22.54 billion up from Ksh19.83 billion to lift total income by 11% to Ksh54.83 billion.
According to the Equity Group profit 2019 details, Non-performing loans are at 8.3%, 430 basis points lower than the sector NPL ratio of 12.6%. NPL coverage on IFRS 9 stands at 78% in Kenya and 74% at the Group level.
The scaling of the business through geographical expansion continues to register impressive results, with the regional subsidiaries growing their assets by 26% to reach a contribution of 27% of the Group’s asset base.
Two of the subsidiaries Rwanda and Uganda registered a return on average equity (RoAE) of 23.9% and 21.2% respectively, covering their cost of capital, whereas DRC continued its impressive growth in RoAE to 17.7% up from 15.9%. This enabled the Group to register a RoAE of 22.9% and a Return on Average Assets (RoAA) of 3.7%.
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