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Kenya

Equity profit stays level

NAIROBI, Kenya, Oct 26- Continued investments in Equity Bank Group’s infrastructure and expansion have seen it maintain its profit levels for the nine months ending September 2009 at Sh3.3 billion

Group Chief Executive Officer James Mwangi told an investor briefing on Monday that the after-tax results which match last year’s corresponding period emanate from their strategy of investing for the future.

“This was deliberate because we wanted to invest the Sh12 billion in new infrastructure that would drive future growth. If we didn’t invest in that, we would have been heavily profitable this year but the future would not be looking as bright,” he explained.

He however said they expected to reap the benefits of the investment costs in the fourth quarter with an estimated increase of 20 percent over last year’s profits.

Already out of the 35 additional branches opened during the year, 11 had broken even and were expected to make significant contribution towards the bank’s profitability.

These investments as well as those made to upgrade their Information and Communication Technology platform and hire more staff had resulted in the increase of the operating costs by 31 percent to Sh7.1 billion for the same period.

Net interest income grew by 40 percent to Sh6.7 billion driven by a growth in the loan book while the deposits for the group went up by 38 percent to close at Sh65.7 billion.

Mr Mwangi however expressed confidence that this was in consistence with their traditional performance trend that had seen a growth in the number of branches, customers, borrowers, number of Automated Teller Machines.

“What these graphs show is that the bank has in a way been able to overcome the challenges inbuilt with the economic slowdown,” the CEO said.

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The current quarter’s outlook is also bright as the bank has already cashed in on the high tea farmers’ second payments where it took 20 percent of the Sh17 billion bonus as customer deposits.

Mr Mwangi also dismissed reports that the bank had been negatively impacted by the poor performance of the Small and Medium sized enterprises and the agricultural sector following the hard economic times and drought.

“Equity banks households. When you look particularly at those in the rural areas, they are able to balance their incomes in a very significant way. The farmer has a cow, a goat, children to rely on and they are able to move on despite the hardships,” he added.

At the same time, Mr Mwangi hinted that the bank would like to increase its stake at mortgage lender Housing Finance where it controls 25 percent.

The Group is also eyeing a stake at the National Bank of Kenya when its privatisation gets underway.

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