Equity Bank CEO James Mwangi [David Gichuru, Standard] Equity Bank ’s net profit in the third quarter of 2021 grew by 79 per cent to hit Sh26.9 billion as the lender substantially cut its stock of bad loans.
The nine-months profit has raced past the Sh20.1 billion profit that the lender posted in the full-year ended December 2020.
By end of September last year, the listed lender made a profit after tax of Sh15.04 billion in a tumultuous period in which banks hysterically put up a wall of insurance against possible defaults by borrowers who were devastated by the pandemic.
Equity Bank’s profitability was also boosted by a 25 per cent uptick in its revenues to Sh80.5 billion, reflecting both improved business activities and aggressive debt collection efforts by the most profitable bank in the region.
In the first nine months last year, the lender’s income was Sh64.1 billion, a big chunk eaten away by loan-loss provision. READ MORE
CBK data shows lenders recorded a profit before tax of Sh96.4 billion in the first half of this year.
"We are emerging from Covid-19 . We feel that the country has almost bounced back," James Mwangi, Equity Bank Chief Executive Officer, said during an investor briefing on Monday. Mr Mwangi was confident that following easing of the Covid-19 containment measures, the revenues will keep growing.
Mwangi talked of Equity Bank’s twin strategy of offensive and defensive through which the lender has aggressively sought to grow its revenue while managing its costs, particularly bad loans.
Interest income from loans grew by 23.4 per cent to Sh48.5 billion, with a good chunk of the earnings coming from government securities.
Income from fees and commissions, which is the non-funded income, grew faster at 29 per cent to Sh32 billion.
Much of the income came from forex income, bond trading, trade finance, with Mwangi noting that Equity was increasingly transforming into “a service bank.”With a lot of customers beginning to service their loans as the moratorium period in which borrowers had been given a debt repayment holiday of between six and 12 months ended, Equity Bank released money that had been set aside as provision against defaults. Loan-loss provision dropped by 68 per cent to Sh5.1 billion compared to Sh14.8 billion in September 2021.And as a result, the company’s total operating costs dropped to Sh43.8 billion from Sh45.3 billion.This was despite an increase interest expense and staff costs.The increase in interest expense […]