Equity Group has announced the financial results for the year ended 31st December 2019 that reflect a 14% profit after tax growth to Kshs 22.6 billion from Kshs 19.8 billion in 2018. The impressive performance registered during an interest capping period was driven by a 23% growth in loan book to Kshs 366.4billion from Kshs 297.2 billion in 2018.
The growth in loan book, saw the Group balance sheet register a 17% growth to reach Kshs.673.7 billion up from Kshs 573.4 billion funded by a growth in customer deposits of 14%, shareholders funds of 18% and a 26% growth of long-term borrowed funds.
Speaking during the release of the Group’s results Dr. James Mwangi, Managing Director and CEO said : “ Execution of the Group’s business strategy continued to yield results as non-funded income contributed 40% of the Group’s total income reflecting quality and diversification of income. Success in our regional expansion and business diversification saw subsidiaries contribution to Group profit after tax rise to 18% up from 15% the previous year.”
Return on average equity (RoAE) from subsidiaries grew to 16.9% up from 13.3%. Subsidiaries assets accounted for 27% of the Group’s total assets while their profit after tax contribution grew to 18% of Group’s profits up from 14% in 2018. Improved efficiencies at the subsidiaries saw their cost structure contribution to the Group improve to 35% from 37% in 2018.
The Group continued to maintain an agile balance sheet with a liquidity of 52.1%, a loan deposit ratio of 75.9% and a core capital to risk weighted asset ratio of 19.8%. The balance sheet reflects solid diversified funding with customer deposits constituting 72% of the total funding, shareholders and long-term borrowing contributing 17% and 8% respectively. Net loans constituted 54% of the total assets while government securities and cash and cash equivalents contributed 26% and 13% of the total asset allocation respectively.
“Our purpose of transforming lives, giving dignity and expanding opportunities for wealth creation and our vision of championing social economic prosperity of the people of Africa is driving our business,” said Dr. James Mwangi.
Innovations and digitization continued to transform the business from a place you go to, to something you do. The business model continues to evolve from a fixed to a viable cost business model leveraging off variable cost third party infrastructure principally mobile, internet, agency and merchant banking. 97% of all transactions happen outside the branch while 93% of all loan transactions are via the mobile channel.
The Group registered enhanced efficiency and cost optimization with cost income ratio improving to 51% from 52.4% in 2018. In addition, it maintained its yield on interest earning assets at 11.2% despite the challenge of interest capping and declining yield curve.