Subsidiaries drive Equity profit up 5 percent to Sh36.2 billion
The net earnings of regional lender Equity Group for the third quarter increased by 5 percent to Kes36.2 billion, driven by an impressive performance from the lender’s subsidiaries across East Africa.
Although the net earnings of the lender’s Kenya unit dipped by 20 percent to Kes19.3 billion, Equity Bank Kenya still accounted for half of the earnings. An equivalent contribution came from the subsidiaries, fueled by a growth of 142 percent in DRC, 23 percent in Uganda, 46 percent in Rwanda, 136 percent in Tanzania, and 177 percent by Equity Life Assurance Kenya.
“We have seen the impact of regional expansion. Our decision to invest in the region was informed by a long-term view,” explained Dr. James Mwangi, CEO of Equity Group.
During the quarter, non-funded income increased by 38 percent to Kes56.5 billion, up from Kes41.1 billion. Net interest income also grew by 21 percent to Kes72.6 billion, up from Kes59.8 billion. Non-funded income contributed 43.8 percent of the total income of Kes129.1 billion, up from 40.7 percent the previous year.
“We grew our loan book by 26 percent despite the uncertainty of difficult economic times to ensure our customers continued to fund their dreams while keeping the lights of the economy on,” noted Dr. Mwangi.
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Non performing loans
While the lender’s loans grew by 26 percent to Kes845.9 billion, up from Kes673.9 billion in a similar quarter in 2022, Equity’s provision for non-performing loans surged by 107 percent to Kes17.7 billion, up from Kes8.6 billion. Data shows Equity’s gross non-performing loans closed the quarter at Kes124.5 billion, an increase of 83.5 percent from the third quarter in 2022.
The bank reported that branches processed 5 percent of the loan disbursements, with a value of 58 percent of the entire portfolio, while digital channels processed 95 percent of loan disbursements and 42 percent in value.
Meanwhile, customer deposits increased by 19.9 percent to Kes1.2 trillion, even as the banking giant’s assets expanded by 24 percent to Kes1.69 trillion. Equity’s foreign exchange income grew by 56 percent, driven by a 24 percent growth in foreign remittances to Kes309.1 billion, up from Kes248.7 billion, delivering essential forex inflows while raising remittance processing income by 19 percent from Kes1.3 billion to Kes1.6 billion.
