Equity Centre in Nairobi upperhill. FILE PHOTO | NMG Equity Bank has overtaken KCB Group as Kenya’s most profitable lender on back of aggressive expansion of foreign subsidiaries in a year when earnings plunged due to Covid-19 pandemic.
Equity Bank net profit dropped 11 per cent to Sh19.7 billion, racing ahead of KCB whose earnings fell 22 per cent to Sh19.6 billion with the performance of the foreign subsidiaries setting the two rivals apart.
KCB Group subsidiaries brought in Sh3.6 billion in net profits, which was has half the Sh7.2 billion that Equity received from its operations outside Kenya.
The growth of Equity profits from the foreign subsidiaries was on the back of its acquisition of Congo’s Banqué Commerciale du Congo in August, a deal that helped make it the first Kenyan banks to grow balance sheet beyond Sh1 trillion.
“Profit after tax from outside Kenya contributed to 28 per cent of our bottom line from 18 per cent the previous year as we increased market share and the merger in DRC propelled the group from position 4 to position 2 in that market,” said James Mwangi Equity Group CEO.
“We saw organic growth in Kenya and Uganda and also grew through seizing an opportunity on acquisition of BCDC in DRC where we were able to migrate and merge with our subsidiary Equity Bank Congo (EBC) and rebranded the new acquisition to Equity Commercial Bank of Congo (Equity BCDC),” he said.
Equity grew its loan book to Sh477.8 billion from Sh366 billion in the year under review, reflecting a growth of 30.5 percent.
KCB loans grew at slower place of 10.3 percent to Sh595 billion.
While both banks grew the income from lending and deposits in rival banks, Equity outpaced KCB on non-interest income that comes from forex trading and transaction fees.
Equity’s non-interest income grew by Sh7.8 billion or 25.4 percent last year, dwarfing KCB’s that grew Sh279 million or 0.99 percent growth.
At the Nairobi bourse, Equity market value is currently at Sh141.7 billion compared to KCB’s Sh126 billion.Cooperative Bank maintained its position as the third most profitable Bank making Sh10.8 billion last year followed by Standard Chartered Bank with Sh5.4 billion net profit.Stanbic Bank (Sh5.1 billion profit) overtook NCBA (Sh4.5 billion) and ABSA (Sh4.1 billion) to become the country’s fifth most profitable lender.