Equity Bank Group CEO James Mwangi. FILE PHOTO | NMG Equity Group’s net profit for the year ended December 2019 grew 13.8 percent to Sh22.6 billion, driven by increased interest and non-interest income.
The rise in profits, from Sh19.8 billion in 2018, came on the back of a 23 percent growth in its loan book to Sh366.4 billion.
Net interest income, mainly from loans and advances to customers, increased by 8.6 percent to Sh44.98 billion.
Non-interest income, usually from fees and commissions, rose 19 percent to Sh30.78 billion, increasing its share in operating income.
Group CEO James Mwangi said the performance points to success in the diversification of income streams as well as growing contribution of business outside Kenya.
“Execution of the group’s business strategy continued to yield results as non-funded income contributed 40 percent of the group’s total income reflecting quality and diversification of income,” said Mr Mwangi.
Net loans constituted 54 percent of the total assets while government securities and cash and cash equivalents contributed 26 percent and 13 percent of the total asset allocation respectively.
“Success in our regional expansion and business diversification saw subsidiaries contribution to group profit after tax rise to 18 percent up from 15 percent the previous year,” said the CEO.
The Nairobi Securities Exchange-listed lender’s return on average equity from subsidiaries grew to 16.9 percent up from 13.3 percent.
Subsidiaries’ share of costs to the group reduced from 37 percent to 35 percent, pointing to increased efficiency.
During the period, operating expenses rose by 14 percent to Sh44.3 billion compared with previous year’s Sh38.2 billion. This was mainly driven by increased staff costs and loan loss provisions.The group increased loan loss provision by 51 percent to Sh4.4 billion up from Sh2.9 billion in 2018. This as gross non-performing loans rose by similar margin to hit Sh36.3 billion.Equity with operations in Kenya, Uganda, Tanzania, Rwanda, South Sudan and Democratic Republic of Congo, is also cross-listed on the Uganda Securities Exchange and the Rwanda Stock Exchange.The board of directors of has proposed a Sh2.50 dividend per share, being a 25 percent rise from Sh2 paid last year.Equity has also proposed to set up an insurance company, subject to shareholders and regulatory approvals.