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Equity has announced a 36% growth in its half-year earnings from a profit after tax of Ksh 17.9 billion posted in 2021 to Ksh 24.4 billion for the first half of 2022.
The profit growth was principally driven by a 29% growth in interest income to Kshs 55 billion up from Kshs 42.8 billion as a result of the growth of loans to customers by 29% to Kshs 650.6 billion up from Kshs 504.8 billion.
“The loan growth was targeted to supporting our clients to recover and rebuild after the Covid-19 business disruptions while allowing re-purposing and retooling for resilience and agility to take advantage of emerging opportunities and green shoots in the real economy, “ said Dr Mwangi, Equity Group Managing Director and CEO.
The differentiated strategy adopted by management to support borrowers to cope with the difficulties of Covid-19 business disruptions has seen most of the businesses survive and recover.
Out of Kshs 171.4 billion Covid-19 restructured loan book, Kshs 46.6 billion has been fully repaid, and a further Kshs 114.0 has resumed repayment, with only Kshs 8.1 billion non-performing.
Out of the remaining Kshs 11 billion which is anticipated to resume repayment within the next six months, only Kshs 2.7 billion is showing a strain in recovery.
In pursuit of resilience and prudence, management has fully provided for the entire Kshs 8.1 billion Covid-19 book that has resumed repayment and is non-performing while proactively downgrading Kshs 2.7 billion of the remaining restructured book.
The success of the recovery and resilience strategy is reflected by the decline in NPL ratios to 8.5% compared to 10.7% the previous year. The Group’s 8.5% NPL positively and favourably compares to Kenya’s banking industry NPL ratio of 14.7% as at 30th June 2022.
The Group’s NPL coverage stands at 94%. NPL coverage inclusive of credit risk guarantees stands at 119.8% and the cost of risk has normalised to pre-Covid rates of below 1.5%.
The Group continues to prudently hedge against default through a loan book diversification strategy across market segments, with large enterprises holding 26%, SMEs 43%, consumers 20%, agriculture 8%, and micro enterprises 3% of the loan book.
Group loan book diversification currently reflects 45.9% in US dollars and 54.1% in local currencies. Geographical sovereign risk diversification has Kenya holding 65%, DRC 19.6%, Uganda 7.3%, Rwanda 4.4%, Tanzania 3.6% and South Sudan 0.1%.
The results released on Tuesday continue to reflect a sustained digital transformation with 99% of all customer transactions now happening outside the branch network.
Between June 2019 and June 2022, digital banking transactions through mobile and internet channels, Agency and Merchant infrastructure doubled from 330 million to 663.9 million while transactions on the Group’s own infrastructure of branches and ATMs declined from 25.3 million to 19.2 million transactions.
