Equity’s first-quarter profit up 8 percent to Sh12.8 billion
Regional lender Equity Group has reported an eight percent jump in net earnings to Kes12.8 billion in the period ended March 30 on higher income.
In the period under focus, the lender saw a 21 percent surge in interest income to close the quarter at Kes32.4 billion compared to Kes26.7 billion reported during the comparable quarter last year.
“Customer deposits grew to Kes1.11 trillion up from Kes900 billion while the loan book grew to Kes756 billion up from Kes623 billion,” Equity Group CEO Dr James Mwangi said.
Equity Group’s net loans went up by 21 percent to Kes756 billion from Kes623.6 billion. “Our NPL is at 9.1 percent against the industry average ratio of 14 percent. Our comfort is on our provision coverage,” added Dr Mwangi.
The bank’s regional expansion continues to pay dividends with Dr Mwangi saying the DRC market has become the lender’s biggest Forex generator overtaking the Kenyan Unit.
Further, Equity’s digital transaction registered 23.3 percent growth to Kes2.28 trillion while digital payment systems posted 171 percent growth to Kes54.2 billion from Kes20 billion reported last year.
Interestingly, the lender’s investment in government securities increased marginally by one percent to Kes392.5 billion from Kes389.4 billion by March 2022.
The marginal rise in government paper syncs with latest data by Central Bank that shows lenders in Kenya are holding the smallest portion of state debt in almost 10 years.
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With interest hikes, heightened risk of default, and the possibility of restructuring in the industry, banks have been dumping government securities.
At the same time, Equity’s interest expense increased by 47 percent to Kes10.7 billion from Kes7.5 percent in 2022 on what Dr Mwangi said is “because of the repricing of loans borrowed globally. We believe the US (Federal Reserve) will pause and hopefully net interest income will improve.”
In the quarter, the bank reported a 21 percent growth in the balance sheet to Kes1.54 trillion in total assets.
Dr James Mwangi said total costs went up by 46 percent to Kes22.8 billion up from Kes15.6 billion primarily on account of a 127 percent jump in loan loss provision of Kes3.1 billion up from Kes1.4 billion.
Equally, the Group staff costs swelled by 33 percent to Kes6.6 billion up from Kes5 billion even as other operating expenses posted 42 percent uptick to Kes13.1 billion up from Kes9.2 billion.
“Growth in staff costs reflected the strengthening of the management bench in keeping with the growth in size, complexity and sophistication of the transformed business,” explained Dr Mwangi.