Equity Group’s net profit for the nine months to September 30 increased by 26.62 per cent, largely helped by a surge in fees and commissions on banking transactions, forex trading and interest income from investments in government securities.
The group’s profit after tax rose to Ksh33.35 billion ($273.36 million) from Ksh26.33 billion ($215.81 million) in the same period last year, with contributions from regional operations increasing to 31 per cent from 23 per cent.
The group’s unaudited financial statements released Tuesday show that total income earned on fees and commissions grew by 28 per cent to Ksh26.74 billion ($219.18 million) from Ksh20.79 billion ($170.4 million) while foreign exchange trading income increased by 57 per cent to Ksh8.89 billion ($72.86 million) from Ksh5.64 billion ($46.22 million).
The Group’s earnings from its investments in government securities (Treasury bills and bonds) grew by 43 per cent to Ksh29.57 billion ($242.37 million) from Ksh20.66 billion ($169.34 million) in the same period.
“Deliberate and intentional strategic decisions have delivered better performance and quality income mix and stronger balance sheet,” said the Group’s Chief Executive James Mwangi.
Regionally, the group’s subsidiaries contributed 31 per cent to the net profit, with a bulk of the profit (69 per cent) coming from the Kenyan operations.
Compared to the same period last year, regional subsidiaries’ contributions to the group’s profit increased by eight (8) percentage points to 31 per cent from 23 per cent.
According to the financial statements, all regional subsidiaries, except Uganda, posted increased net earnings led by the Democratic Republic of Congo (DRC), whose net profit increased to $38.52 million, followed by Rwanda ($15.57 million), South Sudan ($12.29 million) and Tanzania ($2.45 million)
Uganda’s subsidiary posted a 19 per cent decline in net profit to $13.93 million.
The group’s total operating income grew by 26.85 per cent to Ksh102.06 billion ($836.55 million) from Ksh80.45 billion ($659.42 million) while total operating expenses grew to Ksh57.73 billion ($473.19 million) from Ksh43.83 billion ($359.26 million) driven largely by increased loan loss provisions and staff costs.
Total interest income increased by 25 per cent to Ksh84.16 billion ($689.83 million) from Ksh67 billion ($549.18 million) while total non-interest (non-funded) income increased by 32 per cent to Ksh42.22 billion ($346.06 million) from Ksh31.97 billion ($262.04 million).
Equity Group has presence in six countries — DRC, Kenya, Uganda, Tanzania, South Sudan, Rwanda and a representative office in Ethiopia.
The lender, which is listed at the Nairobi Securities Exchange, has exported 40 per cent of its business to South Sudan, DRC, Tanzania, Rwanda and Uganda while holding 60 per cent of the operations in Kenya as part of the diversification plan.
However, its Tanzanian and South Sudan operations are facing challenges.
Early this year, the management said that it was reviewing the lender’s operations in Tanzania with plans for additional investments while at the same time keeping an eye on the developments in the Ethiopian financial sector.
In 2021, the group increased its investment in the DRC by an additional 70 per cent ($103.33 million) bringing its investment in EquityBCDC to about $251.15 million from $147.82 million.
This investment made EquityBCDC the second biggest subsidiary in the region after Kenya.
It is followed by Equity’s investments in Tanzania ($53.91 million), Uganda ($52.6 million), South Sudan ($49.65 million) and Rwanda ($24.34 million).