Regional subsidiaries of lender Equity Group have reported double-digit growth in the first six months of this year, pushing the bank to post 17 percent increase in net earnings to KES34.6 billion.

During the period Equity's operations in Tanzania experienced strong turnaround, recording 75 percent jump in profitability to KES1.1 billion. The Group's operations in Uganda followed closely at 40 percent increase while Rwanda posted 21 percent gains in profit and assets.

"Our regional subsidiaries have contributed: 49 percent of deposits, 50 percent of the loan book, 48 percent of our assets, 50 percent of revenue and 46 percent of profit before tax," Equity Group CEO, Dr. James Mwangi, said during investor briefing on the institution's half-year performance.

He added: "We began our journey as a Kenyan bank, where our headquarters remain. Today, we have grown into a regional bank, with half of our balance sheet now generated by our subsidiaries across the region."

The lender said the strong results are a result of its four-year transformation plan rolled out in regional markets Uganda, Tanzania, Rwanda and in the Democratic Republic of Congo (DRC).

“The execution of the strategic business plan has started to reflect on the balance sheet and performance of the Group in agriculture, mining, manufacturing, trade and investment, and small and medium enterprises (SMEs)," Dr. Mwangi explained.

Net interest income

Equity saw nine percent surge in net interest income to KES59.3 billion riding on growth in loan book growth and higher margins in neighbouring markets. 

At the same time, non-funded income contracted by 4 percent to KES40.9 billion. The total income was up three percent to KES100.2 billion.

During the half, the bank's expenses declined by two percent on the back of 34 percent cut in the provision for loan losses to KES6.9 billion.

Additionally, loans to customers increased by 4 percent during the six months to close at KES825.1 billion under what Dr. Mwangi termed a "challenging economic environment". 

Customer deposits increased by two percent to KES1.32 trillion pushing up the lender's asset base by three percent to KES1.8 trillion.

The Group’s insurance business posted equally stellar performance with gross written premiums posting 115 percent jump to KES5.18 billion, accounting for a 26 percent uptick in in profit before tax.

Insurance

According to Dr. Mwangi, in just three years, the assets of Equity Insurance Group have reached KES31 billion.

During the half, revenue from insurance business increased by 59 percent to KES1.63 billion even as net insurance and investment earnings posted a 30 percent uptick to KES1.05 billion, with net investment income accounting for KES775 million in the earnings mix.

Looking forward, the CEO said trade finance offering is poised to be the lender's "most demanded solution" as more countries tap into the African Continental Free Trade Area to deepen intra-African trade. We are targeting a 65 percent SME composition of the loan book, Dr. Mwangi noted.

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