, NAIROBI, Kenya, Apr 26 – Equity Bank has announced a 29 percent growth in pre-tax profit to Sh3.73 billion for the first quarter of 2012, attributed to an increase in the bank’s loan book and greater focus on product development, credit and risk management.
Managing Director James Mwangi said the bank is modeled around sound management and corporate governance structures which have helped cushion the institution against risks inherent in the market today, making it attractive to foreign investors.
“We started with zero foreign investments and we now have 43 percent of the bank owned by foreigners meaning that just seven percentage points more and it tips in the favor of foreign investors,” he revealed.
“When we look at who is buying Equity shares, it’s the largest fund managers in the world and four of the investors who have participated heavily have more than a trillion US dollars in asset management,” he added.
Equity, which focuses on the lower-income part of the market and operates in Kenya, Tanzania, Uganda, South Sudan and Rwanda, said its loan book grew 41 percent to Sh121.1 billion.
Despite a challenging business environment characterised by high inflation and interest rates, prudent cost and risk management saw the bank’s total income rise 38 percent to Sh9.01 billion from Sh6.52 billion.
“The bank’s long term borrowings funds increased by 110 percent to Sh14.9 billion from Sh7.9 billion on the back of an enhanced global rating for the bank,” he stated.
“The AA- credit rating awarded to Equity Bank has enabled the institution to attract long term funds from international lenders, which are invested in projects that uplift the lives of the people of the region at very competitive rates,” he said.
This year, the Equity Group Foundation will spend Sh180 million towards the 2012 Equity Bank’s University Sponsorship, Leadership and Mentorship Program and in partnership with the MasterCard Foundation, they have rolled out the ‘Wings to Fly’ Program which has secured scholarships for nearly 7,300 students.
Mwangi acknowledged that a huge investment in technology and alternative deliver channels such as agents have improved access to banking, increased cost efficiencies and allowed the bank’s total assets to grow by 36 percent to close at 208.9 billion shillings in March.
“Equity no longer needs the fixed assets such as Land Rovers and the security needed years ago to transport rural customers to branches and we’re now utilizing mobile technology, which is owned by the customer, to make transactions from our agents countrywide,” he announced.
“We’ve seen great success from this and that unique distribution channel bridges the last mile,” he noted.
Customer deposits grew by 34 percent to close at Sh153.68 billion up from Sh115.07 billion and the customer base grew by more than 1.3 million to over 7.5 million customers, making it the largest bank in customer base in Africa.
Mwangi applauded parliament’s rejection of a proposal to cap commercial banks’ interest rates, which ended months of anxiety by bankers who feared the move would crimp their earnings and lead to credit rationing.
“That would have destroyed the economy,” he remarked.