EA banks shake off Covid disruption to remain in profit-making territory

Saturday August 21 2021

James Mwangi, Equity Group Holdings managing director and CEO, with head of financial and regulatory reporting Mary Nteere during the announcement of the regional bank’s half-year results in Nairobi on August 17. Picture: File


East Africa’s top retail banks bounced back to profitability in six months to June 2021 by doubling their net earnings to over Ksh33 billion ($302.75 million), signalling a resilience of the Covid-19 ravaged economy with prospects of better dividends to shareholders by the end of the financial year.

The lenders, KCB Bank and Equity Bank — which control close to 40 percent of the industry’s total assets estimated at Ksh5.67 trillion ($52.01 billion) as at June 30 — made a combined net profit of Ksh16.5 billion ($151.37 million) from their banking operations, pushing their total net profits to Ksh33.2 billion ($304.58 million) during the six months period to June 30. KCB’s net profit doubled to Ksh15.3 billion ($140.36 million) while that of Equity Bank jumped by a similar margin to Ksh17.9 billion ($164.22 million) underpinned by growth in interest and non-interest income, reduction in loan loss provisions and better performance of regional subsidiaries.

Equity Bank was the highest earner having made a profit of Ksh8.8 billion ($80.73 million), bringing its total net profit to Ksh17.9 billion ($164.22 million) from Ksh9.1 billion ($83.48 million) in the same period last year.It was followed by KCB that made a profit of Ksh7.7 billion ($70.64 million), bringing its total net profit for the period to Ksh15.3 billion($140.36 million) from Ksh7.6 billion ($69.72 million).

Stanbic Holdings Plc, a member of the Standard Bank Group of South Africa, which has operations in South Sudan made a profit of Ksh950 million pushing its net profit by 37 percent to Ksh3.5 billion ($32.11 million) from Ksh2.55 billion ($23.39 million) in the same period last year.On the other hand, Co-operative Bank which also operates a subsidiary in South Sudan generated a paltry Ksh170 million ($1.55 million) in profit during the six months to June 30, bringing its total net profit to Ksh7.36 billion ($67.52 million) from Ksh7.19 billion ($65.96 million), a 2.36 percent growth.

According to the Kenya Bankers Association, the banking industry started the year on a strong footing buffered by strong capital and liquidity position. However, the industry’s lobby group cautioned that the lenders are yet to recovery full from the effects of the pandemic. “We are not out of the woods yet because Covid is still here with us and depending on how it evolves of course the response is usually through the containment measures which constrain economic activities and therefore the demand for credit is also equally affected and therefore the performance of the banks both as a provider of credit and also as economic players themselves are affected,” Habil Olaka, the association’s chief executive told The EastAfrican.

“We are not yet out of the woods and a lot depends on how we are able to pick ourselves out of this situation and learn how to live with the situation of Covid. ”Equity Group announced a resumption in dividend payment to shareholders following its 98 percent growth in net profit during the six months period to June 30. “The defensive and offensive strategy adopted by the Group at the onset of the Covid-19 pandemic to create resilience, agility and recovery has been very effective in positioning, navigating and driving performance,” said James Mwangi the Group’s chief executive.


The lender’s performance was largely boosted by the Group’s heavy investment in government securities, increased revenues on banking transactions and a significant reduction in loan loss provisions. However, its regional subsidiaries save for South Sudan made positive contributions to the overall profit led by Equity BCDC in the Democratic Republic of Congo, Uganda, Rwanda) and Tanzania.