Equity Group’s Profit After Tax increased by 99 percent to Ksh40.1 billion from Ksh20.1 billion with Profit Before Tax recording a growth of 134 percent to Ksh51.9 billion up from Ksh22.2 billion the previous year. The Group has recommended a record dividend payout of Ksh3 per share totaling Ksh11.3 billion which is a 50 percent jump from the previous dividend pay-out after earnings per share grew by 98 percent to Ksh10.40 up from Ksh5.20 the previous year.
Net interest income grew by 25 percent to Ksh68.8 billion up from Ksh55.1 billion. This was driven by a 23 percent growth in loan book to Ksh587.8 billion up from Ksh477.8 billion and an 81 percent growth in investment in Government securities to Ksh394.1 billion up from Ksh217.4 billion. Non funded income grew by 15 percent to Ksh43.6 billion up from Ksh37.8 billion driven mainly by trade finance, payment channels and foreign exchange trading income. Trade finance registered a 55 percent growth in revenue to Ksh3.2 billion up from Ksh2.1 billion.
Despite zero rating mobile transaction offerings, transaction income grew by 37 percent to Ksh10.4 billion up from Ksh7.6 billion on the back of E-commerce and Merchant banking business. Foreign exchange trading income grew by 33 percent to Ksh8.3 billion up from Ksh6.2 billion driven by diaspora inflows that grew 37 percent to reach Ksh383.5 billion up from Ksh279.4 billion.
Total income grew by 21 percent to surpass the psychological USD 1 billion mark to record Ksh112.4 billion up from Ksh92.9 billion the previous year. Despite a 24 percent growth in staff costs to Ksh19.1 billion, growth in other operating costs to Ksh36.5 billion up from the Ksh30.6 billion, total costs recorded a decline of 16 percent to Ksh60.5 billion down from Ksh71.9 billion driven by an 81 percent decline in loan loss provision to Ksh4.9 billion down from Ksh25.9 billion the previous year. Portfolio at risk declined to 8.3 percent down from 11 percent with non-performing loan coverage increasing to 98 percent up from 89 percent. In absolute terms, total non-performing loans declined to Ksh44.5 billion down from Ksh50.6 billion.
Total Assets grew by 29 percent to Ksh1.305 trillion up from Ksh1.015 trillion driven by a corresponding 29 percent growth in customer deposits to Ksh959 billion up from Ksh740.8 billion resulting in excess cash being deployed in low yielding government securities at 9.6 percent, while cost to income remained fairly constant at 49.1 percent up from 48.5 percent. Return on Average Equity expanded to 26.1 percent up from 15.3 percent while Return on Average Assets grew to 3.5 percent up from 2.3 percent on the back of benefits of economies of scale and efficiencies of digitisation and a shift of business model from fixed costs to variable cost resulting in the enhanced returns.
The bulk of customers’ engagement and consumption of banking products and services is now on digital channels of internet and mobile on self-service devices delivering 24-hour banking experience and convenience. Banking has largely shifted from where you go to what you on do on your devices compressing geography and distance.
The Group’s offensive and defensive strategy has led to achievement of the twin objective of securing the future while securing market gains of customer consolidation. Equity Group has now strategically positioned itself as a systemic regional diversified business in six countries with the dominant market in Kenya contributing only 59% and 63% of the Assets and Revenues respectively. Strict adherence to IFRS 9 has led to full recognition of lifetime risk in the Asset portfolio with provisions for portfolio at risk being 98 percent and at 128 percent with credit risk guarantees.
“We have strengthened our business model to achieve an embedded shared value concept in our twin engine of social and economic aspirations and deliverables. We have scaled our social and environmental impact investments in capacity building and enhancement through education, health, and entrepreneurship training,” said Dr. Mwangi.
“We have strengthened our participation in formalising and integrating the informal sector in the real economy with the formal supply chains and ecosystems of agriculture, micro, small and medium enterprises. To strengthen the social contract of shared prosperity, Equity is celebrating the strong social brand and exceptional performance by offering 2,000 comprehensive Wings to Fly scholarships for 4 years at an anticipated cost of Kshs 2 billion representing shared prosperity with host communities.”
The Group has a positive outlook of the future. We have launched a Marshall Plan ‘Africa Recovery and Resilience Plan’ with a seed fund of USD 6 billion equivalent to Kshs 690 billion to act as a stimulus for the private sector. The ‘Africa Recovery and Resilience Plan’ is built on a platform of collaboration and cooperation for Public Private Partnerships to transform the region through value addition and ecosystem development in 5 key areas:
The strategy aims at funding and financing 5 million businesses and 25 million households to reach 100 million people in Africa and to create 50 million jobs both directly and indirectly. By offering its rails and capability to drive this ambition, Equity hopes to be equally transformed to sustain its growth trajectory that has led it to sustain 10-fold growth every five years and to exponentially grow value for its shareholders.
“We are optimistic that the ‘Africa Recovery and Resilience Plan’ holds great promise for Africa’s socio-economic prosperity and Equity Group is well positioned to catalyse this outcome,” concluded Dr Mwangi.