Stockbrokers at the Nairobi Securities Exchange. FILE PHOTO | NMG The Equity Group #ticker:EQTY share was the besting performing bank stock at the Nairobi bourse in a year when lenders added Sh195.7 billion to shareholders wealth.
Equity closed the year at Sh53.50, reflecting a growth of 53.5 percent in a share gain that cemented its position as the second most valuable firm at the Nairobi bourse after Safaricom with a market value of Sh203 billion.
The bank outperformed KCB Group #ticker:KCB, which gained 44.2 percent last year, Co-operative Bank #ticker:COOP (14.3 percent), Standard Chartered Bank #ticker:SCBK (4.1 percent) and Barclays #ticker:BBK (21.9 percent).
Analysts have linked the rise in Equity share price to its performance, regional expansion strategy and dividends payout in the year when bank stocks also got a boost from lifting of the cap on interest rates.
A bank stocks rally started mid-October on news that President Uhuru Kenyatta had directed MPs to remove the cap on rates, a move that was cemented in law on November 7.
“Based on the half-year 2019 numbers, we believe that Standard Chartered and Equity Bank are best placed to take advantage of the situation,” said AIB Capital
The analysis showed Standard Chartered and Equity had liquidity ratios of 67.23 percent and 61.6 percent, giving them ample room to grow loan book and profits.
“We should see the Equity loan book grow robustly in the first year post-rate cap,” said AIB Capital.
Equity, which has in a few years grown to beat multinational banks, including Barclays and Standard Chartered, saw its net profit for the nine months to September grow 8.1 percent to Sh15.8 billion.
Equity CEO James Mwangi, who has served the lender for 29 years, is now betting on the lender’s subsidiaries for growth.
Subsidiaries in Tanzania, Rwanda, Burundi, South Sudan, Uganda and the Democratic Republic of Congo grew their assets by 26 percent in the period. Equity aims for its subsidiaries in the east and central Africa to account for 40 percent of its assets.“We can see that happening in the course of next year,” said Mwangi.As part of its growth strategy, the bank is pursuing mergers and acquisitions in the region.It is buying 66.5 percent stake Banque Commerciale du Congo’s and in talks to buy four banks four in Rwanda, Zambia, Mozambique and Tanzania from a London-listed investment group.