Equity Group grew its loan book by 26 per cent to Sh845.9 billion from Sh673.9 billion in Quarter 3 of the 2023-2024 Fiscal Year as customers grappled with high inflation, interest rates and a weakened shilling.

Equity CEO Dr James Mwangi says the group opted to stand by its customers who were battered by the tough economy in Kenya and across other countries in the East African region that it operates in.

Dr Mwangi indicated that Equity Bank offered its customers flexible funding options to enable their businesses stay afloat while leveraging its new ventures to create new opportunities for growth.

The Group says the measures helped MSMEs to mitigate the shocks elicited by inflation, rising interest rates, and local currency depreciation in a move aimed at protecting households and enterprises.

The CEO says the steps adopted measures include absorbing the effects of increased interest rates on deposit and debt and high inflation in its operational cost without transferring the impact to customers.

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Equity’s interest expense on deposits and long-term debt funding grew by 58 per cent due to higher funding costs as top line interest income grew by 32 per cent, and net interest income grew by 21 per cent.

“It was a strategic decision to support and cushion our customers to fortify their opportunities for survival and enhance their resilience during these difficult economic times by absorbing part of the funding costs and keeping yields on loans and government securities at almost the same level at 12.1 per cent and 11.5 per cent respectively,” said Dr Mwangi.

He added, “We did not hesitate in making this strategic decision to focus on supporting our customers to navigate and survive the difficult and challenging microeconomic environment as this aligns to our true north, our purpose to change lives, give dignity and expand opportunities for wealth creation. It was an easy strategic choice to focus on the long-term resilience of our customers’ success.”

EquityBCDC Managing Director, Celestin Muntuabu, Equity Life Assurance (Kenya) Limited Managing Director, Angela Okinda, Equity Group Managing Director and CEO, Dr. James Mwangi, Equity Bank Tanzania Managing Director, Isabella Maganga and Equity Bank Kenya Managing Director, Gerald Warui during the Q3 2023 Investor Briefing. PHOTO/EQUITY

Equity delivered a 28 per cent total income growth due to the interest expense growth of 58 per cent, interest income growth of 32 per cent, a slowed net interest income growth of 21 per cent, and a 38 per cent non-funded income growth.

The Group’s total costs increased by 47 per cent due to measures to cushion its customers from a tough economy with staff expenses growing by 33 per cent and other operating expenses by 38% per cent.

During the third quarter, the Group’s cost of funding and deposits increased by 35 per cent, total operating costs rose by 47 per cent, yields on loans grew by only 7 per cent from 11.3 to 12.1 per cent.

Equity’s net profit grew by 5 per cent to Sh36.2 billion from Sh34.4 billion as its loan loss provision grew by 107 per cent from Sh8.6 billion to Sh17.7 billion to fortify buffers for its Non-Performing Loans (NPL).

Kenya contributed to 50 per cent of the Group’s profits similar to its subsidiaries driven by a 142 per cent growth in DRC, 23 per cent in Uganda, 46 per cent in Rwanda, 136 per cent in Tanzania and 177 per cent by Equity Life Assurance Kenya.

Its deposits grew by 20 per cent to Sh1.2 billion from Sh1 billion as Kenya contributed 51 per cent after a 4 per cent growth and subsidiaries contributed a 49 per cent growth backed by a 28 per cent surge in deposits in DRC, 32 per cent in Uganda, 39 per cent in Rwanda and 56 per cent in Tanzania.

During the period in review, loans rose by 26 per cent to Sh845.9 billion from Sh673.9 billion, as Kenya contributed 54 per cent after an 8 per cent growth and subsidiaries contributed a 46 per cent growth.

The growth in the Group’s loan acquisition was attributed to a 71 per cent growth in DRC, 40 per cent in Uganda, 33 per cent in Tanzania and 20 per cent in Rwanda.

Similarly, total assets grew by 24 per cent to Sh1.69 billion from Sh1.36 billion with Kenya contributing 53 per cent after a growth of 11 per cent and subsidiaries contributing 47 per cent driven by 31 per cent growth in DRC, 34 per cent in Uganda, 40 per cent in Rwanda, 44 per cent in Tanzania and a 63 per cent growth by Equity Life Assurance Kenya.

The Group’s revenue grew by 28 per cent as Kenya contributed 50 per cent after a 13 per cent growth as subsidiaries contributed 50 per cent as revenues grew by 81 per cent in DRC, 33 per cent in Uganda, 38 per cent in Rwanda and 203 per cent for Equity Life Assurance Kenya.

Non-funded income registered robust growth of 38% to Kshs. 56.5 billion up from Kshs. 41.1 billion as net interest income grew by 21% to Kshs. 72.6 billion up from Kshs. 59.8 billion allowing non-funded income to contribute 43.8% of the total income of Kshs.129.1 billion up from 40.7% the previous year.

IN SUMMARY:

                               Kenya                   Subsidiary 

Total Assets         53%                    47%

Revenue.              50%                    50%

Profit after tax.    50%                    50%


Disbursement Value Growth     Disbursement transaction count growth

Kenya                   55%                          55%

Uganda.               144%.                      115%

Tanzania               2,088%                   117%