Equity Group Profit 2019 and Equity Bank CEO Dr James Mwangi www.businesstoday.co.ke
“Faster growth in total income above net interest income reflects the success of the strategic pursuit to grow quality income through non-funded income growth,” says Equity Group CEO Dr James Mwangi. [ Photo / Business Today ]

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.

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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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