Equity Group Holdings Plc (EGH) has announced a strong financial performance for the first half of 2024, despite facing ongoing macroeconomic challenges. The bank’s profit after tax surged by 12% to KES 29.6 billion, reflecting its resilience in a period marked by high interest rates and volatile exchange rates.
The group’s total assets grew by 6% to KES 1.75 trillion as of 30 June 2024. This growth, surpassing the prevailing inflation rate of 4%, highlights EGH’s ability to expand its balance sheet even in a tough economic climate. Regional operations now contribute significantly to the group’s performance, accounting for 49.7% of total assets and 50.2% of profit before tax.
Dr. James Mwangi, EGH’s Managing Director and Chief Executive Officer, expressed optimism about the group’s financial health. “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,” Dr. Mwangi said. He noted that the improved liquidity allowed the group to reduce its leverage by KES 75 billion, easing expensive borrowings.
Deposits surged by 11% year-on-year to KES 1.3 trillion, contributing to a 55% increase in cash and cash equivalents, which reached KES 341 billion. Investment securities also saw growth, reaching KES 459 billion. These developments underscore the group’s strong liquidity position, which stands at 57%.
The increase in deposits has bolstered EGH’s capacity to support its operations and invest in new opportunities. The group’s shareholders’ funds grew by 13% to KES 220 billion, further strengthening its position. This capital growth supports EGH’s involvement in the Africa Resilience and Recovery Plan (ARRP), aimed at bolstering private sector-led recovery initiatives.
Interest income rose by 22% to KES 84.8 billion, up from KES 69.8 billion, despite the high inflation and interest rate environment. Non-funded income also saw a steady increase, leading to a total income growth of 16% to KES 95.1 billion. This growth was tempered by a 30% rise in interest expenses, which amounted to KES 30.4 billion.
Regional expansion remains a core focus for EGH. The group’s Kenyan subsidiary contributed 43% of revenue, down from 46% in the previous period, while regional subsidiaries collectively accounted for 47% of total loans and 51% of profit after tax. The acquisition of Cogebanque in Rwanda has proven fruitful, enhancing regional synergies.
EGH’s conservative approach to risk management is evident in its increase in loan loss provisions by 35% to KES 8.5 billion. The bank’s non-performing loans (NPL) ratio of 12.9% remains below the industry average of 16.3%, thanks to its prudent provisioning and risk management strategies. The NPL coverage ratio stands at 70%, reflecting the bank’s strong stance on managing credit risk.
Operating expenses increased by 27% due to higher costs associated with infrastructure modernization and inflation. Despite this, EGH reported a half-year profit after tax of KES 29.6 billion, with earnings per share rising to KES 7.6. The group’s capital buffers remain robust, with a core capital ratio of 15.8% and a total capital ratio of 18.4%, exceeding the regulatory thresholds of 10.5% and 14.5%, respectively.
Looking ahead, EGH continues to diversify its offerings. Recently granted a general insurance license in addition to its existing life assurance license, the group aims to provide comprehensive financial services. This strategic move will allow EGH to offer holistic insurance solutions, leveraging its extensive branch network and over 1.1 million agents and merchants for distribution.
Dr. Mwangi highlighted the group’s commitment to sustainability and technology. “In the coming weeks, the Group will release its third sustainability report, demonstrating our focus on integrating sustainability into our strategy,” he said. EGH has also partnered with Microsoft and Mastercard to digitize 10 million customers under the community pass initiative.
Furthermore, EGH’s Equity Leaders Program continues to make an impact, with 113 scholars from Kenya, Rwanda, Uganda, and the DRC receiving full scholarships valued at KES 2.8 billion. This initiative supports the education of young leaders and underscores EGH’s dedication to social impact.
