The successful execution of the Equity 3.0 innovative business strategy which is centered on digitization and virtualization, disruption of delivery channels, transforming the business model and redefining customer’s experience delivered a 10% growth in Profit before tax during the first half year of 2019.
The group registered an 18% growth in total assets to reach Kshs.638.7 billion up from Kshs.542.02 billion registered in the same period last year. Interest earning assets grew by 15% to Kshs.500.5 billion up from Kshs.433.9 billion driven by a 17% growth in net loan book to Kshs. 320.9 billion up from Ksh.275 billion and a 13% growth in government securities to Kshs.179.6 billion up from Kshs. 158.9 billion.
While releasing the half year results, Dr. James Mwangi, the group managing director and chief executive officer (CEO) attributed the growth in assets to successful mobilization of deposits. “Our customer centric and ecosystem approach to intermediation has given us an opportunity to target our customer’s horizontal and vertical value chains,” said Dr. Mwangi adding that the branch is evolving to a small and medium enterprises ( SMEs) advisory centre as majority of the bank’s customers move to more convenient self-service digital channels.
Total liabilities grew by 18% to reach Kshs. 535.9 billion driven by a growth of 16% in customer deposits from Kshs.393.7 billion to Kshs. 458.6 billion. The group has a cost effective funding comprising 72% customer deposits, 17% shareholders’ funds and 9% long-term borrowing.
The total income by the same token grew by 10% to Kshs.36.0 billion up from Kshs. 32.7 billion driven by growth in treasury income of 12% from Kshs 10.3 billion to Kshs 11.5 billion. Interest income grew by 9% to Kshs.27.7 billion up from Kshs. 25.4 billion, while non-funded income registered a 13% growth to reach Kshs.14.9 billion up from Kshs.13.1 billion. Non-funded income contribution to total Income was 41.4% up from 40.2% recorded the previous year driven mainly by a 20% growth in merchant commissions from Kshs 876 million to Kshs 1.055 billion, Swift and RTGS commissions which grew from Kshs. 358 million to Kshs. 413 million, a growth of 15%. Diaspora remittance volumes grew by 28% from Kshs 52.1 billion to Kshs 66.5 billion, resulting to forex trading income growing by 27% to Kshs.1.9 billion up from Kshs.1.5 billion.
Profit before tax
The group’s profit before tax grew by 10% to reach Kshs.17.0 billion up from Kshs.15.5 billion while the profit after tax increased by 9% to reach Kshs.12 billion up from Kshs.11 billion.
While the regional subsidiaries contribution to the group profits remained at 18%, they increased their total group asset contribution to 27% up from 26% and their total group deposits contribution to 26% up from 25%.
The convenience of virtualization and digitization saw the number of loans disbursed reach 2 million out of which 1.9 million loans (93%), worth Kshs.20.0 billion were disbursed through the Equitel mobile channel while 100,000 loans (7%) worth Kshs 70.9 billion were disbursed through the branch.
Equity Bank Kenya is well positioned to participate in delivering the government of Kenya’s 4 big agenda. During the last 18 months, the bank has differentiated itself and repositioned its balance sheet by increasing its liquidity to 61% through a 79% growth in investment in government securities.
It has supported the strengthening of the balance sheet by enhancing its core capital to total deposits to 20.1% (against a regulatory minimum requirement of 8%) while core capital to total risk weighted assets stood at 17.5% against a regulatory minimum requirement of 10.5%. Disrupting the business model, re-imagining the distribution channels, digitization, re-positioning the balance sheet and massive social impact investment in the Equity brand has strategically and uniquely differentiated Equity Group. Convergence of products and services on Omni-channel has delivered unparalleled convenience and ease of banking. As a result, the market has rewarded Equity Group with a 11% growth in customer base from 12.5 million accounts to 13.9 million accounts.