Equity Group’s net profit for the period ending on December 31, 2023, saw a decrease of 5 percent, amounting to KES 43.7 billion compared to KES 46.1 billion in 2022.
The decline in profitability is mainly attributed to a substantial 128.7 percent rise in loan loss provisions, accompanied by a notable 81.5 percent increase in gross non-performing loans year-on-year.
Equity Group attributed the decrease in profit to a significant increase in interest expenses, which rose by 53 percent, surpassing the growth rate of interest income, which stood at 30 percent.
The group has proposed a dividend of KES 15.1 billion. Additionally, other operating expenses and staff costs experienced growth of 39 percent and 28 percent, respectively, driven by elevated inflation rates and the depreciation of the Kenyan shilling.
Shareholder funds experienced a 20 percent growth, reaching KES 218.1 billion, compared to the previous figure of KES 182.2 billion.
The return on average equity was recorded at 22.3 percent, exceeding the cost of capital, which was 18 percent.
“The Non-Performing Loans trend is consistent with management’s view as at the investors 3rd quarter briefing that NPLs had peaked. Prudent risk management culture led the board to approve a proactive derisking of future performance by providing for the lifetime expected loss on outstanding NPLs,” said James Mwangi, Group Chief Executive Officer.
