EQUITY GROUP REGISTERS KSHS. 16 BILLION PROFIT IN Q1 OF 2024

Equity Group Chief Operating Officer, Samuel Kirubi, Equity Group Managing Director and CEO, Dr. James Mwangi and Equity Group Chief Finance Officer, Moses Nyabanda, during the Q1 2024 Investor Briefing event.
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After reporting a five percent decline in profit after tax for the year ended 31st December 2023, Equity Group Holdings (EGH) has bounced back recording strong 1st quarter results. Profit after tax for the period ended 31st March 2024 has increased by 25 percent to a record Kshs. 16 billion compared to Kshs. 12.8 billion a similar period last year.

The Group’s bold decisive actions saw growth in deposits placements to 11 percent compared to the deposits growth of 29 percent registered for the year ended 31st December 2023, as the Group skipped expensive deposits. Long-term borrowed funds declined by 21 percent in the first quarter as the Group paid out maturing repriced expensive dollar denominated loans.

Growth

In the first quarter, the cost of credit risk dropped to 2.9 percent from 4.4 percent. Loan to deposit ratio stood at 63 percent compared to 65.3 percent recorded in the fourth quarter of 2023. Customer deposits slowed down to 41 percent from 53 percent recorded in the previous quarter attributed to rising inflation.

Interest income grew to 33 percent compared to 30 percent in the same period under review. Provisions stood at 84 percent compared to the 139 percent for the previous quarter. At the same time, total costs declined from 52 percent to 28 percent pointing out increased profitability.

While releasing the results Dr. James Mwangi, Equity Group Managing Director and CEO attributed the growth to differentiated strong leadership decision-making and agile balance sheet. “The recovery momentum is strong after accepting and adapting to the new normal of operating in an environment characterized by volatility, uncertainty, complexity and ambiguity – an environment defined by high inflation, interest rates and volatile currency exchange rates,” he said.

The Group’s mark to market losses has reduced to Kshs. 48.4 billion from a high of Kshs. 78 billion in the third quarter of 2023. At the same time its liquidity stood at 52.1 percent with a balance sheet of Kshs.1.69 trillion nearly split equally between a loan book of Kshs. 779 billion and liquid assets of Kshs. 752 billion.

Regional player

“The regional banking subsidiaries contributed 63 percent of the Ksh. 20.4 billion profit before tax with a return on average equity of 27.6 percent, cementing the Group’s position as the regional banking leader,” Mwangi added.

EGH enjoys over 20 million deposit customers who have contributed Kshs. 1.236 trillion of the Kshs. 1.69 trillion and underpinned by long-term funding of Kshs. 343 billion made up of long-term debt funding of Kshs. 125 billion and Kshs. 219 billion of shareholders’ funds.

In its relentless execution of the Africa Recovery and Resilience Plan (ARRP), the Group has successfully transformed from a Kenyan banking leader to a Pan-African systemic financial service leader. The Group boasts of being in the top five position in five out of six countries it operates in and being in the top two positions in three other countries

As a result of business and product diversification, non-funded income contributed 43.9 percent of the total income of Kshs. 49.6 billion at Kshs. 21.8 billion. Treasury contributed 30 percent of all gross income of Kshs. 64.8 billion at Kshs.19.6 billion while trade finance revenue grew at 22 percent to Kshs. 3.1 billion.

Equity Group has embarked on a unique opportunity of matching commercial and operational capabilities to match the global brand through systems and processes re-engineering, product house and people competencies that deliver on customer value proposition that match the global brand within the robust governance and strategic plan.

As the global macro-economic headwinds break and paves way for the global recovery, Equity Group is strategically positioned to tap into the growth potential of the opportunity of East Africa’s thriving eco-system of trade connections. The region is set to continue to lead Africa’s growth pulse given it accounts for the highest number of countries in Africa with GDP growth greater than 5 percent.

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