Profit soars for Kenya Equity Bank

July 20, 2010

, NAIROBI, Kenya, Jul 20 – Equity Bank Group has registered a 44 percent rise in profit after tax to Sh3 billion for the half year ended June 30.

Releasing the results, the Group’s Chief Executive Officer James Mwangi credited the continued economic recovery in the country, favourable weather for the agriculture sector and reliance on innovative technological infrastructure as key drivers of their performance.

“We are seeing a lot of energy with the government to get the chapter on reforms closed; the economy seems to have breathed a sigh of relief. Vision 2030 flagship projects are on very high gear in terms of implementation giving enormous business opportunities. That is the environment we are operating in; a lot of optimism and a lot of economic activities,” he said during an investors’ briefing.

This positive economic climate has seen the bank increase loans and deposits to Sh68.3 billion and Sh87.8 billion respectively over the corresponding period last year. The group’s interest income grew by 45 percent to Sh7.31 billion driven mainly by commissions and fees from transactions that rose to Sh3.8 billion.

The customer base was also up by an additional one million clients over the last one year bring the number to 4.95 million. This means that Equity holds 56 percent of total bank accounts in Kenya.

The introduction of the revolutionary account, M-KESHO in May – where users of the Safaricom money transfer service can transfer funds directly into their Equity Bank account – has seen them register 400,000 accounts with an average of 20,000 accounts opened per day.

“If this trend continues, we shall be fully utilising the banking software that can handle up to 35 million accounts. So the dream we had of opening 10 million accounts seems to be achievable before long,” the CEO enthused while pointing to the implementation of the East African Common Market Protocol that ropes in more people.

Mr Mwangi added that the bank was now well capitalised with all systems in place to enable it concentrate on exploiting this capacity with the view of further growing the bank and accelerating their profitability in coming years.

“The bank is very solid and it doesn’t require additional capital; it suggests that we can double the size of the bank. This is particularly exciting for our shareholders as their shares will not be diluted this year or even next year,” he assured.

At the same time, the bank disclosed that investments in the other subsidiaries have begun to bear fruit with the South Sudan outlet contributing Sh130 million to the group’s bottom line.

The Sudanese branch, which recently celebrated its first anniversary, has a balance sheet of Sh3.6 billion and is therefore expected to significantly record more profit particularly if the proposed referendum in January next year is peaceful.

The Ugandan outfit is however still struggling, posting a loss of Ush3 billion (Sh120 million) in the second quarter but it is targeted to break even this month. In Q1, the subsidiary registered a Ush12 billion (Sh600 million) loss, a situation that the bank admitted stemmed from the implementation of the wrong strategy.

However, the CEO said the bank has learned its lessons from the performance of the South Sudan and Ugandan branches which they would apply in the next few years as they expand into the region.

The institution has the dream of being a Pan African bank and hopes to be in 10 countries in the next five years. To help drive this project, Equity has set up a 50-member team that will be expected to advice on the strategies that the bank should adopt in its expansion plan.


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