EQUITY GROUP’S  2023 HALF YEAR  PROFIT AFTER TAX GROWS

The  2023 half year results of Equity Group have been announced. The Group registered a funding growth of 23%. This was  driven by 21% and 29%  growth in customer deposits and shareholders’ funds respectively  as a result of recovery of mark-to-market losses on Eurobonds.  The net loans to customers registered a growth of 26%,  while investments in government securities grew by 33%.  Additionally, the yields on investment in government securities increased to 11.1%,  up from 10.1%,  while yields on loans increased to 11.9% up from 11.4%. Cost of deposits rose to 2.9% up from 2.3%,  driving cost of funding to 3.7% up from 2.8%. This  generated  a profit after tax of 9%, reflecting the volatility in the operating microenvironment.

While releasing these  results, the Group Managing Director  and CEO Dr. James Mwangi said :  “Our strategic pursuit has resiliently positioned us to weather the macro-economic headwinds and turbulence. Regional geographical expansion and business diversification has seen reliance on contribution of the Kenyan banking subsidiary reduced with other subsidiaries contributing 46% total assets and 45% of profit before tax, driven primarily by insurance and the Democratic Republic of Congo  (DRC)  business. The drive to non-funded income growth registered good success with total income growing at 24%,  driven by a 42% growth of non-funded income and 17% growth of net interest income.”

A defensive strategy saw liquidity ratio remain strong at 51.1% , while capital ratios remained strong at 15.1% and 19% for core capital to risk weighted assets and total capital to risk weighted assets respectively. Despite the challenging macro and micro economic environment, focus on asset quality management saw the Group register a non-performing loan ( NPL)  ratio of 9.8% against an industry average of 14.9%. Prudent management saw growth in cost of credit risk to 1.9% up from 1.3% driven by 89% growth in provisions to cover the risk of rising portfolio at risk ratios. The Group strengthened its leadership bench by recruiting skilled and experienced executives to match the capabilities and competencies to the challenges of growth. Staff costs registered a growth of 32% , while other operating costs grew by 33%.

Fast growth

East Africa has remained the fastest growing region in the world. The regional governments are focused on fiscal consolidation with budget deficit reductions. Given Equity Group’s offensive strategy of focusing on payments, trade finance, foreign exchange  business among other non-funded income while strengthening efficiency through digitization and defensive approach to liquidity, capital and asset quality buffers, it  continued to deliver on its stated financial outlook. Profit after tax stood at Kshs.26.3 billion reflecting a return on equity of 27.7% and a return on assets of 3.5%. “We are confident Equity Group is strategically positioned as a regional systemic bank among the top  three  in five  of its six  operating countries to support further integration and increased cross border trade under the African continental free trade area , while supporting the region to remain the fastest growing common market in the world to offer opportunity for long term sustained value creation,” said  Dr. Mwangi.