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Equity Bank profit nearly doubles to $344 million

Wednesday March 23 2022
mwangi

Equity Group CEO James Mwangi during the announcement of financial results for 2021 in Nairobi on March 22, 2022. PHOTO | DIANA NGILA | NMG

By JAMES ANYANZWA

Kenya's biggest bank Equity Group nearly doubled its net profit for the year ended December 31, 2021, on account of a more than fivefold reduction in loan loss provisions and growth in interest income from investments in government securities.

The regional lender, which is listed on the Nairobi Securities Exchange (NSE), recorded net profit growth of 98 percent to Ksh39.17 billion ($343.59 million) from Ksh19.78 billion ($173.5 million) the previous year.

Its provisions for bad loans dropped to Ksh5.84 billion ($51.22 million) from Ksh26.63 billion ($233.59 million) in 2020, subsequently cutting operating expenses by 15 percent to Ksh61.5 billion ($539.47 million) from Ksh72.66 billion ($637.36 million).

Total operating income went up by 21 percent to Ksh113.38 billion ($994.56 million) from Ksh93.65 billion ($821.49 million), helped by a 40 percent growth in interest income on government securities to Ksh 29.45 billion ($258.33 million) from Ksh20.93 billion ($183.59 million) and a 22.64 percent growth in interest income on loans to Ksh63.81 billion ($559.73 million) from Ksh52.03 billion ($456.4 million).

Its stock on the Nairobi bourse rose by 0.49 percent to Ksh51.50 ($0.45) per share as at 1.39 pm Tuesday after it announced the results.

The Group’s net interest income increased by 24.79 percent to Ksh68.81 billion ($603.59 million) from Ksh55.14 billion ($483.68 million), while non-interest income grew by Ksh15.76 billion to Ksh44.57 billion ($390.96 million) during the period under review.

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“We have strengthened our business model to achieve an embedded shared value concept in our twin engine of social and economic aspirations and deliverables. We have scaled our social and environmental impact investments in capacity building and enhancement through education, health, and entrepreneurship training,” said James Mwangi, the Group’s chief executive.

“We have strengthened our participation in formalising and integrating the informal sector in the real economy with the formal supply chains and ecosystems of agriculture, micro, small and medium enterprises.”

The board recommended a final dividend of Ksh3 ($0.02) per share subject to shareholders’ approval after a two-year freeze.

Its customer deposits increased by 29 percent to Ksh958.97 billion ($8.41 billion) from Ksh740. 8 billion ($6.49 billion), while the loan book expanded by 23 percent to Ksh587.77 billion ($5.07 billion) from Ksh477.84 billion ($4.19 billion).

Equity has operations in Kenya, the Democratic Republic of Congo (DRC), Uganda, Tanzania, Rwanda and South Sudan.

The lender is bullish on a sustained profit trajectory after diversifying into new lines of business, including trade financing, insurance and derivatives to boost its revenues.

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