EQUITY GROUP HOLDINGS  REPORTS A  PROFIT AFTER TAX OF KSHS 40.9 BILLION IN QUARTER THREE

Equity Group Holdings   regional businesses have  contributed  51% of its  profit before tax and 48% of  total assets to reach Kshs.1.7 trillion as at 30th September 2024. The group, which has been named the top financial brand in Africa and the second  strongest banking brand in the world by Brand Finance , has seen its deposit franchise grow 9% year-on-year to Kshs.1.3 trillion.  Its customer base is   now at 21.3 million. This growth in deposits has resulted in a 12% increase in cash and cash equivalents to Kshs.295.5 billion and growth in investment securities to Kshs.468.1 billion.

While releasing the  quarter three results, Dr. James Mwangi, Equity Group’s   Managing Director and Chief Executive Officer said  : “We are optimistic that the strong liquidity of the group has positioned us to effectively support our customers as the economy starts showing signs of improvement in the key markets we operate in, signaled by reduction of the Central Bank Reference rates in some of the countries where we operate. With the improved liquidity, the Group continued to optimize its balance sheet, reducing leverage by Kshs.137.6 billion of expensive long-term borrowings.”

By the same token, the shareholders’ funds grew by 17% to Kshs.227.0 billion. This has  strengthened   the group’s ability to deliver the private sector led Africa Resilience and Recovery Plan  by investing in new subsidiary undertakings in the insurance group.  It   has also  positioned   the group to continue  taking   advantage of  emerging  opportunities in the market.  

The group registered robust top line growth with interest income growing by 13% to Kshs. 125.9 billion from Kshs.111.1 billion during the period under review. This is  despite the high inflation and interest shocks which saw returns to customers in the form of interest expense grow 18% to Kshs.45.3 billion from Kshs.38.5 billion.  Its  non-funded income continues to grow steadily, increasing by Kshs.2 billion and yielding a total income growth of 8% to Kshs.138.9 billion, up from Kshs.128.9 billion year-on-year.

Diversification

 Equity  Group’s offensive strategy of regional and product diversification continues to bear fruit with the Kenya banking subsidiary contributing 47% of its revenue from 52% in the previous period. As business continues to grow in the Democratic Republic of the Congo (DRC) and with synergies realized from the Cogebanque acquisition in Rwanda, subsidiaries now account for 47% of the  total loans, up from 46% in 2023, besides  contributing  47% of  the  profit after tax. The global operating environment characterized by macro-economic shocks saw the group continuing with its conservative and prudent defensive approach by booking adequate loan loss provisions amounting to Kshs 12.7 billion. This has resulted in a non-performing loan   ratio of 13.4%, way below the latest published industry average of 16.7%.

The group continues to make significant strides in its differentiated managerial strategy and in enhancing its control environment to better position it to navigate the challenging macroeconomic and complex regulatory landscape while driving sustainable growth. Its  continued investment in modernizing its technology infrastructure coupled with high inflation has seen its expenses excluding provisions increase by 19%.  Additionally, it   recorded a  nine month profit after tax of Kshs.40.9 billion representing a 13% year- on-year growth. Its  earnings per share increased  to Kshs.10.4 up from Kshs.9.2.  In the same vein,  the regional subsidiaries accounted for 51% of the profit for the period.

Disruption

Having disrupted and transformed the banking industry, Equity Group  has   identified insurance as  a  critical  contributor  to social economic prosperity by ensuring business and individual resilience and security. The group was recently granted a general insurance license in addition to the already existing life assurance license. Consequently,  it   will offer holistic and integrated financial services to corporates, small and medium  enterprises ( SMEs)  and retail customers. This is by making available  insurance solutions  to meet  customers’  needs for protecting life, health, and wealth.

Equity Life Assurance (Kenya) being the first underwriting subsidiary of the group posted 181% year-on-year profit before tax, closing at Kshs. 1.07 billion year-to-date up from Kshs. 381 million for the same period last year.

By leveraging the strategic capabilities and partnerships in banking, healthcare, distribution, SMEs, agriculture and technology sectors, the group aims to provide customer centric, digital first and efficient products that are accessible to millions of customers. This will  enable them to bridge the protection gap and fulfil their goals. The group’s   extensive branch network  as  well  as  over 1.1 million agents and merchants continues to play a critical role  in the insurance distribution strategy for all customer segments by ensuring ease of access  and service for customers.

Technology

The Group’s transformation is technology led. It   is enhancing   business under its ‘ One Equity’  offering, that enables self-services with unparalleled convenience based on freedom of channel choice. Digital channels dominate with 86% of its total  transactions, agency channels process 8%,  while automated teller machines ( ATMs) , merchant acquiring and branches each process 2%. The group has rolled out a common product house that allows cross selling and bundling of products under the One Equity offering – a one stop shop for financial services.  Most importantly,  the  group has developed an iconic brand. It  was ranked one of the most valuable brands  on the Nairobi Securities Exchange (NSE) and Africa’s top banking brand.

During the quarter under review, it   unveiled its 2023 sustainability report which underscored its commitment to advancing sustainability through the enhancement of its strategy from a twin-engine model to a holistic tri-engine model focusing on social, economic, nature and environment all driving a sustainable business strategy.  According   to  Dr. Mwangi,  despite operating in a challenging environment, Equity Group remains committed to sustainable practices. Its recent   sustainability report highlights the group’s strategic approach to embedding sustainability. As an early adopter of the Taskforce for Nature-related Financial Disclosures (TNFD) framework in Africa, and the Africa Natural Capital Alliance (ANCA) the Group is not only focused on sustainable customer solutions,  but also actively supports nature restoration. It has   achieved the significant milestone of planting  thirty  million trees. In the same vein, Equity Bank continues to lead in climate finance by extending over USD 200 million in climate finance initiatives.