NAIROBI, Kenya, Feb 12 – The Equity Bank Group has reported a 107 percent rise in annual after-tax profit of Sh3.9. billion for the year ended December 2008, compared to Sh1.89 billion in same period last year.
The Bank’s Managing Director James Mwangi attributed the good performance to a strategy that focuses on small profit margins, which target large volumes of customers.
“The business model of high volumes and low margins has proved resilient during hard economic times,” Dr Mwangi observed
Pre-tax profit went up by 11 percent to Sh5.02 billion for the same period, up from Sh2.378 billion for the same period last year.
The bank increased its dividend payout by 50 percent from Sh543 million to Sh1.1 billion and has proposed a share split of ten shares for every share held – subject to regulator and shareholders approval
“Following a series of splits and bonus issues, a shareholder who in 2002 held one share, would end up with 600 shares this year,” Dr Mwangi noted.
Mwangi observed that this growth was achieved despite an overall economic downturn in the country, which has seen GDP growth tumble from a high of 7.1 percent last year to a forecast of 2.2 percent for the year just ended. Inflation meanwhile reached its highest level in a decade at 26.2 percent.
He noted that the period under the review was also one of the most turbulent due to the post election violence and unprecedented high inflation levels on the local scene, and the financial meltdown at the global level.
Meanwhile, the bank has allayed fears that the banking sector could slow down lending as a result of the negative economic downturn.
“It will be wrong for banks to do this since it will make the recovery process from this downturn slower. And looking at the quality of our loan book, I don’t see the strain in our customers repaying their loans so this is not an option we are considering,” Dr Mwangi said.
The bank is predicting significant growth for this year with the launch of new products and the regional expansion process.
“This year we anticipate huge growth especially from Uganda with the opening of 20 branches within Kampala by March this year,” he said.