Equity Group profit after tax increases by 13 per cent to Sh40.9 billion in Q3 2024

Equity Group Holdings Plc (EGH) reported a Sh40.9 billion profit after tax for the first nine months of 2024, marking a 13 per cent year-on-year growth amid a challenging economic environment.

Regional businesses fuelled this success, contributing 51 per cent of profit before tax and expanding EGH's asset base to Sh1.7 trillion by  September 30, 2024.

Driven by a 9 per cent increase in deposits to Sh1.3 trillion, EGH strengthened its liquidity position with cash equivalents rising 12 per cent to Sh295.5 billion, and investment securities up to Sh468.1 billion.

The Group’s overall liquidity ratio stands at a robust 55 per cent. Earnings per share climbed to Sh10.4 from Sh9.2, reflecting improved shareholder value.

“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,” James Mwangi, Managing Director and CEO said, noting that EGH reduced its leverage by Sh137.6 billion in long-term borrowings.

Despite high inflation, interest income increased by 13 per cent to Sh125.9 billion, while interest expenses rose 18 per cent to Sh45.3 billion.

Non-funded income grew by Sh2 billion, propelling total income to Sh138.9 billion, an 8 per cent increase. The Group’s net profit after tax benefited from a 17 per cent growth in shareholders’ funds to Sh227.0 billion.

EGH's diversification across markets like the Democratic Republic of Congo (DRC) and Rwanda resulted in a shift, with the Kenyan subsidiary now contributing 47 per cent of revenue, down from 52 per cent previously.

Regional subsidiaries now hold 47 per cent of loans and profits after tax, underscoring the Group’s geographic expansion strategy.

Navigating a volatile economy, EGH maintained a conservative lending approach, setting aside Sh12.7 billion in provisions to achieve an NPL coverage ratio of 67 per cent and an NPL rate of 13.4 per cent—well below the 16.7 per cent industry average.

EGH’s solid capital buffers reflect a core capital ratio of 15.9 per cent and a total capital ratio of 18.3 per cent, both above regulatory requirements.

EGH’s insurance arm, Equity Life Assurance (Kenya), recorded substantial gains, posting a 181 per cent rise in profit before tax to Sh1.07 billion.

This growth was part of EGH’s broader insurance initiative, which now encompasses general insurance offerings.

Technology remains a cornerstone of EGH's operations, with 86 per cent of transactions processed through digital channels.

Under its One Equity model, EGH bundles services across banking and insurance for retail, SME, and corporate clients.

EGH’s initiatives also extend into social impact, with the Equity Leaders Program awarding Sh2.8 billion in scholarships to 113 scholars and the Young Africa Works Programme disbursing Sh323.3 billion to support 315,225 MSMEs.

EGH’s commitment to sustainability includes USD 200 million in climate finance and partnerships with IFC, Microsoft, and Mastercard, which aid in digitalising agriculture and supporting climate action.

Dr. Mwangi underscored the Group's dedication to sustainable growth, emphasising its “significant milestone of planting 30 million trees” and extending climate financing initiatives across its markets.

"Despite operating in a challenging environment, Equity Group remains committed to sustainable practices. Our recently unveiled Sustainability Report highlights the Group’s strategic approach to embedding sustainability," Mwangi stated.

"As an early adopter of the Taskforce for Nature-related Financial Disclosures (TNFD) framework in Africa, and the Africa Natural Capital Alliance (ANCA) the Group is not only focused on sustainable customer solutions but also actively supports nature restoration, having achieved the significant milestone of planting 30 million trees."