Equity shareholders to enjoy better earnings

Equity shareholders to enjoy better earnings

Shareholders of Equity Bank will earn Sh2 more per share as the lender reported 79 per cent increase in net profit for the first nine months of the year.

Yesterday, the firm said Earnings Per Share (EPS) improved significantly quarter on quarter from Sh4.65 in Q2 to Sh6.98 in Q3.

Last year, EPS that indicates how much a firm earns from each share of its stock, also a metric used to estimate corporate value, fell from Sh4.59 in Q3, 2019 to Sh3.93 at the end of nine months ending September 30, 2020.

The Nairobi Securities Exchange (NSE) has projected the bank’s EPS to grow 19.5 per cent year on year, a trend it has exhibited since 2016.

This is good news to investors keen on buying the company’s shares as they are assured of sustained return.

The lender saw its net earnings increase from Sh15 billion to Sh26.9 billion. The bulk of this growth came from its subsidiaries with total assets recording a growth of 27 per cent and a 25 per cent growth in total income.

Overall, the total deposits hit Sh873.7 billion with assets growing to Sh1.2 trillion.

"Regional subsidiaries grew their group contribution to deposits to 42 per cent up from 40 per cent, revenue to 37 per cent up from 30per cent and profit before tax to 26 per cent up from 21 per cent,’’ Equity Bank Holding CEO James Mwangi said.

He also linked the increased profitability to falling provisions for bad loans.

Net loans to customers increased from Sh504 billion to Sh559 billion between June and September.

Total interest income from loans, investment in government paper as well as earnings from deposits with other banking institutions, increased from Sh42.7 billion in Q2 to Sh67 billion at the end of September this year.The Group’s earnings from fees and commissions on loans to customers nearly doubled from Sh3.5 billion to Sh5.7 billion during the financial period under review.The lender’s operating expenses, however, went up significantly from Sh28.1 billion in Q2 to Sh43.8 billion in Q3, pushed up by rising staff costs due to recent acquisitions in the region, the latest being in the Democratic Republic of Congo (DRC).“Total income grew by 25.5 per cent compared to 16 per cent in the last period. We expect the opening of economy and removal of curfew will lift the interest higher,” Mwangi said.

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