Equity Bank headquaters While banks have shied away from lending to the private sector on the back of holds to the interest charged on commercial loans and the subsequent attractiveness of government securities, the group has in six months pushed more funds to households and businesses.
The milestone is without compromising on its asset quality as the lender’s share of Non-Performing Loans (NPLs) remain stable at 8.6 percent during the half year period against a 12.7 percent industry average.
The lender which marks its 35 th year of existence later this year expect to squeeze out more sap from its cost optimization structure to drive up the return on asset and equity investing in the second half of the year.
Equity Group has announced a nine percent increase in net profit for the first six months of 2019 to Ksh.12 billion.
The lender’s notable surge in earnings over the period is attributable partly to a rise in loan advancement to the private sector and a significant squeeze on operational efficiencies including cost optimization through the heightened digitization of transactions.
While banks have shied away from lending to the private sector on the back of holds to the interest charged on commercial loans and the subsequent attractiveness of government securities, Equity Group has in six months pushed more funds to households and businesses.
This to make a greater killing from private sector lending in comparison to Treasury returns, breaking a three-year trend defined by the Group’s accumulation of funds in government debt.
At the same-time, the bank has achieved the milestone without compromising on its asset quality as the lender’s share of Non-Performing Loans (NPLs) remain stable at 8.6 percent during the half year period when compared to the greater average industry charge of bad loans over the same period estimated at 12.7 percent.
According to Equity Group Managing Director James Mwangi, the fete has been achieved behind falling treasury yields even as the bank finds an effective policy to extend credit to households and businesses without on-boarding additional risks.
“Like a hunter who learns how to shoot without missing, we have learnt to fly without perching,” he said.
“It is the market forces that have driven the decision to pack more funds in the private sector. You wouldn’t compare a near 13 percent return on loans against an eight percent earning rate from treasury bills.”Equity’s yield on loans was up by 12.1 percent to Ksh.18.7 billion […]
