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Equity Group has posted a net profit of KES 8.7 billion for the first three months of 2021. This represents a 64% jump from KES 5.3 billion posted in a similar period last year.
Interest income grew by 32% while non-funded income grew by 30% to contribute 42% of total income. The bank’s regional subsidiaries contributed to 40% of total deposits and total assets and 23% of profit before tax with Rwanda and Uganda delivering above cost of capital returns.
The Group’s CEO, Dr James Mwangi, attributed the performance of the regional subsidiaries to evolving economic, social, political governance reforms and environment which have strengthened prospects for long-term sustained regional growth and investment.
” This coupled with development of physical and soft infrastructure enhance opportunities for private sector credit growth and productivity gains from cross border trade,” said Dr Mwangi.
In a year plagued by a health pandemic and economic crisis, Equity focused on social impact investment in health investing KES.1.7 billion in social response to society, forgoing Kshs.1.5 billion in waived mobile transaction fees, waiving Kshs.1.2 billion in loan rescheduling fees and accommodating Kshs.171 billon (or 31%) of the loan book for up to 3 years of principal and interest repayment breaks to enable businesses to survive.
Of the Sh171 billion loans that had been restructured on Covid-19 hardships, customers have resumed repayment on Sh59 billion, with Sh5 billion already fully cleared.
The lender says it expects another Sh49 billion to be performing by June and Sh20 billion to enter the same status by September.
“We kept the lights of the economies we operate in on, supported businesses to repurpose, retool and recover by supporting livelihoods of our customers during the crisis”, said Dr Mwangi.
Operationally, the Group focused on generating and growing non-funded income, treasury efficiency, geographical expansion and business diversification.
The Group registered a balance sheet expansion of 54% to reach KES 1.07 trillion driven by a 58% growth in customer deposits underpinned by KES140 billion shareholders’ funds.
The lender holds a liquid balance sheet with KES 500 billion of cash, cash equivalents and government securities reflecting the agility to redeploy funding seamlessly as the economies recover from the adverse impact of the Covid-19 multi-crisis.
Equity changed its strategy to adapt to the changing environment and executed a rapid business transformation that saw 98% of all transactions done through digital platforms , and 65% of volume by value.
“Over the last one year, we have witnessed firsthand as our customers adopted our mobile and internet technology channels on self-service devices making our financial services offering truly a 24-hour service and lifestyle”, said Dr Mwangi.
Strong focus on asset quality saw the Group develop an investment portfolio mix that resulted in a market and sectoral diversification across currencies and different geographies.
The Group reported a non-performing loan book of 11.3% compared to the industry average of 14.6%. Strong risk mitigation saw NPL coverage stand at 99% from a mix of provisions at 87% and 12% of credit risk guarantees.
On efficiency and cost optimization, the regional subsidiaries continue to gain momentum with marked improvement in cost to asset ratio and cost to income ratio and significant balance sheet and revenue growth.
Group has reviewed its 2021 performance outlook upward to a return on equity of between 25% to 30% and return on assets of between 3.6% to 4.3% in an environment predicted by the World Bank and IMF to recover quickly.
