In summary:
- Growth In Assets Of 23% To Reach Kshs.1.645 trillion.
- Net Loans Register 26% Growth
- Subsidiaries Contribute 46% Total Assets And 45% Profit Before Tax
- 27.7% Return on Equity
August 15th 2023……Amidst a tough operating global macro environment characterized by
stubbornly sticky high inflation, high interest rates, volatile exchange rates and devaluation of
emerging economies currencies, Equity Group has announced 2023 half year results that
reflect resilience. The Group registered a funding growth of 23% driven by 21% growth in
customer deposits and 29% growth in shareholders’ funds as a result of recovery of mark-to-
market losses on Eurobonds. Net loans to customers registered a growth of 26% while
investments in government securities grew by 33%. Yields on investment in government
securities increased to 11.1% up from 10.1% while yields on loans increased to 11.9% up from
11.4%. Cost of deposits rose to 2.9% up from 2.3% driving cost of funding to 3.7% up from
2.8% generating a profit after tax of 9%, reflecting the volatility in the operating
microenvironment.
While releasing the half year financial results, the Group Managing Director, and CEO Dr.
James Mwangi said “Our strategic pursuit has resiliently positioned us to weather the macro-
economic headwinds and turbulence. Regional geographical expansion and business
diversification has seen reliance on contribution of the Kenyan banking subsidiary reduced with
other subsidiaries contributing 46% total assets and 45% of Profit Before Tax, driven primarily
by insurance and the DRC business. The drive to non-funded income growth registered good
success with total income growing at 24% driven by a 42% growth of non-funded income and
17% growth of net interest income.” He added, “Gross trade finance revenue grew by 117%
with trade finance related lending growing by 46%, FX total income grew by 68% and diaspora
flows grew by 146% to account for 12% of all client FX volumes.”
A defensive strategy saw liquidity ratio remain strong at 51.1% while capital ratios remained
strong at 15.1% and 19% for core capital to risk weighted assets and total capital to risk
weighted assets respectively. Despite the challenging macro and micro economic environment,
focus on asset quality management saw the Group register an NPL ratio of 9.8% against an
industry average of 14.9%. Prudent management saw growth in cost of credit risk to 1.9% up
from 1.3% driven by 89% growth in provisions to cover the risk of rising portfolio at risk (PAR)
ratios. Given the VUCA operating environment the Group strengthened its leadership bench by
recruiting skilled and experienced executives to match the capabilities and competencies to the
challenges of growth. Staff costs registered a growth of 32% while other operating costs grew
by 33%.
East Africa has remained the fastest growing region in the world. The regional governments are
focused on fiscal consolidation with budget deficit reductions. Given Equity Group’s offensive
strategy of focusing on payments, trade finance, FX business among other non-funded income
while strengthening efficiency through digitization and defensive approach to liquidity, capital
and asset quality buffers, the Group continued to deliver on its stated financial outlook. Profit
After Tax stood at Kshs.26.3 billion reflecting a Return on Equity of 27.7% and a Return on
Assets of 3.5%. “We are confident Equity Group is strategically positioned as a regional
systemic bank among the top 3 in 5 of its 6 operating countries to support further integration
and increased cross border trade under the African Continental Free Trade Area while
supporting the region to remain the fastest growing common market in the world to offer
opportunity for long term sustained value creation” added Dr. Mwangi.
