NAIROBI, Kenya, Feb 28 – Impressive growth in the banking sector continues, with Equity Bank posting Sh7.13 billion profit after-tax in its 2010 full year financial results.
The result reflected a 69 percent growth for the bank having posted Sh4.23 billion the previous year.
Briefing investors, Equity Bank Chief Executive officer James Mwangi attributed the growth to a 1.6 million rise in customer numbers, with the bank’s customer base standing at 5.9 million.
This saw customer deposits grow by 50 percent from Sh69.8 billion in 2009 to Sh104.4 billion in 2010.
“We\’re very excited that Equity has bounced back to posting impressive growth. It is the customer numbers that drive our revenues,” Mr Mwangi told investors.
Barclays Bank of Kenya set the ball rolling for the banking sector two weeks ago, reporting a 51 percent growth in pretax profit at Sh13.6 billion.
Last week, Kenya Commercial Bank posted a 56 percent rise in pretax profit reporting Sh9.8 billion while NIC Bank pretax profit leapt 71 percent to Sh2.6 billion.
During the year under review, Equity Bank’s loan book grew by 24 percent to Sh78.3 billion from Sh63.3 billion a year earlier while government securities rose to Sh31.2 billion.
Total interest income grew 28 percent to Sh13.8 billion from Sh10.8 billion as commission income grew to 10.4 billion.
Total operating income grew 41 percent to Sh22.2 billion while operating expenses grew by 26 percent to Sh13.2 billion.
Mr Mwangi said in 2010 the cost to income ratio was at 51 percent indicating that the bank was able to keep a lid on high expenses.
“We saw that cost drivers were not growing as fast as revenue drivers. We intend to bring the ratio down even further to about 48 percent this year,” he said.
The bank\’s total assets grew to Sh143.0 billion from Sh100.8 billion in 2009.
In 2010, Equity Bank chose to consolidate its growth strategy only opening 11 new branches taking its branch network across the region to 165.
Mr Mwangi said the bank had Sh50 billion available for lending in 2011 and would focus on tapping more into the agricultural and infrastructure development sectors.
“We have a huge number of customers that allows us to do huge volumes of transactions,” he said.
The bank has subsidiaries in Uganda and Southern Sudan with the Equity CEO saying the banks were now posting profits.
“Last year Uganda was able to break even while Southern Sudan contributed Sh300 million to our revenues,” Mr Mwangi said adding they were now targeting two new countries to grow the business, without revealing the details.
The bank also deployed its agency-banking model last year with 1,300 agents. Mr Mwangi said they were still waiting for authorisation for another 6,700 agents this year.
The Central Bank of Kenya data indicates that the banking sector’s pretax profit surged 46 percent to Sh66 billion as of November. The growth was being driven by the vibrancy in the economy that saw the number of loans being given grow significantly.
Earnings per share climbed to Sh1.93 from Sh1.14 a year earlier with the bank’s directors proposing a dividend payout of Sh3 per ordinary share up from Sh1.50 in 2009.
Follow the author at https://twitter.com/MjKaranja