Equity Group’s net profit nearly doubles in 1H21

NAIROBI, Kenya, Aug 17 – Equity Group says its net profit has almost doubled in the first half of this year, helped by a defensive and offensive strategy, as well as a drop in bad loan provisions that soared last year owing to the effects of the COVID-19 pandemic.

The Group’s CEO and MD Dr. James Mwangi says net profit jumped to Sh17.9 billion from Sh9.1 billion recorded in the same period last year.

“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,” Mwangi said.

During the period under review, net interest income rose to Sh31.15 billion from Sh24.64 billion, while provisions for bad loans fell to Sh2.91 billion from Sh8.02 billion in the first half of 2020.

Total Assets grew by 50 percent to Sh1.12 trillion from Sh746 billion driven by the growth of 51 percent in deposits to Sh820.3 billion from Sh545.9 billion.

Mwangi noted that nocustomer deposits are growing faster than the uptake of loans but the Group is looking forward to seeing loans growing faster.

Meanwhile, long term borrowed funds grew by 78 percent to Sh102.3 billion up from Sh57.6 billion.

Net Loans and advances grew by 29 percent to Sh504.8 billion up from Sh391.6 billion.

Net non- performing loans declined by Sh5.4 billion from Sh28.3 billion to Sh22.9 billion due to the aggressive provisioning the previous year under the defensive strategy.

Of the Sh171 billion Covid-19 restructured loan book, Sh162 billion is categorized as performing with Sh103 billion having resumed repayments, Sh6 billion fully repaid, Sh92 billion up to date in repayment and Sh5 billion non performing.

According to the CEO, of the Sh171 billion Covid-19 restructured loan book, Sh162 billion is categorized as performing with Sh103 billion having resumed repayments, Sh6 billion fully repaid, Sh92 billion up to date in repayment and Sh5 billion non performing.

“Only Sh64 billion remains under Covid-19 moratorium constituting only 11 percent of the entire loan book.”

Total operating costs grew by 4 percent to Sh27.8 billion against a 33 percent growth in total income to Sh51.6 billion driving profit before tax up to Sh23.8 billion up from Sh12 billion a growth of 99 percent.

Investment in Government securities grew by 46 percent to Sh315.5 billion up from Sh216.4 billion resulting in 50 percent growth in Total Assets to Sh1.12 trillion up from Sh746.5 billion.

Meanwhile, the bank’s Earnings per share grew by 95 percent to Sh4.7 up from Sh2.4.

Liquidity buffers saw cash and cash equivalent register a growth of 154 percent to Sh219.5 billion up from Sh86.6 billion with Liquidity Ratios rising to 62.4 percent up from 54.2 percent with Loan to Deposit Ratio declining to 61.5 percent down from 72 percent.

Total capital to risk weighted assets stood at 17.6 percent while core capital to risk weighted Assets stood at 14.1 percent as at 30^th June positioning the business ready for accelerated growth.

“The strong capital and liquidity ratios have positioned the Group well for continued execution of the offensive strategy particularly in light of improving asset quality and operational efficiency and an improving operating environment,” added Dr. Mwangi.

Going forward, Mwangi says the bank has a positive and optimistic outlook of the future of the business, given its continued delivery of convenience and enhanced trust capital.