Equity Group has recommended a record dividend of Sh15.1 billion for the second consecutive year, which translated to a payout of 36 per cent of its profit after tax.

The proposed dividends announced during the release of Equity Group’s full year 2023 financial results are equivalent to Sh4 dividends out of Sh11.10 earnings per share.

Equity posted Sh43.7 billion profit after tax, driven by net interest income growth of 21 per cent to Sh104.2 billion up, while non-funded income grew by 30 per cent to Sh75.9 billion.

However, during the period in review, the lender’s profit after tax declined by 5 per cent to Sh43.7 billion from Sh46.1 billion in 2022.

Equity Group MD and CEO Dr James Mwangi attributed the post-tax profit decline to a faster rise in interest expense (53 per cent) compared to interest income growth (30 per cent).

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“The Sh4 per share dividend amounts to a 36 per cent payout of the Sh43.7 billion Profit After Tax or Sh11.1 earnings per share and dividend yield of 11.9 per cent on the 2023 year-end closing share price of Sh33.65 or 800 per cent on par value," Mwangi stated.

The financial institution’s net interest income increased by 21 per cent to Sh104.2 billion, while non-funded income witnessed an impressive 30 per cent surge to Sh75.9 billion.

Gross trade finance revenue skyrocketed by 90 per cent to Sh 11 billion, driven by a surge in trade finance lending and guarantees.

Similarly, Equity Groups’ total costs increased by 52 per cent, primarily owing to a 139 per cent increase in loan loss provision to Sh32.8 billion to fortify its asset quality buffers.

“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 and increasing loan loss provision by 139 per cent to Sh32.8 from Sh13.7 billion, driving cost of risk to 4.4 per cent while increasing NPL coverage to 67.3 per cent,” indicated Mwangi.

Total assets grew by 26 per cent to Sh1.822 trillion from Sh428.1 billion fueled by a 29 per cent increase in customer deposits to Sh1.358 trillion, as shareholders’ funds also grew to Sh218.1 billion from Sh72.1 billion.

Gross trade finance revenue grew by 90 per cent to Sh11 billion from Sh5.8 billion driven by a 106 per cent growth of trade finance related lending and 26 per cent growth of trade finance guarantees and off-balance sheet items.

In that period, Equity Group's customer base also realized a significant growth from 10.4 million to 19.6 million, while customer deposits and loan book expanded significantly.