NAIROBI, Kenya, Mar 8 – Equity Group staff numbers declined by 360 in 2015 and management expects a 5 percent shrinkage in 2016 as service delivery moves away from branches.
The firm invested Sh8 billion in Information Technology in the last two years that has seen volumes of transactions on digital channels increase significantly.
“With virtualization we knew the transactions in the branches and ATMs will start declining so we allowed natural attrition and we will continue with this. Anybody leaving the bank will not be replaced and the existing staff we are now retraining them to do SME banking, corporate banking and insurance and so we are not retrenching anybody,” Equity Group Chief Executive James Mwangi told Capital FM Business.
Agency banking transactions increased by 35 percent in the period under review to reach 51.3 million transactions valued at Sh341.5 billion while transactions on its mobile banking platform Equitel increased by 1000 percent to hit 151 million transactions valued at Sh114.9 billion.
Volume of total loans disbursed on mobile phones reached 8.5 billion on account of 1.9 million loans with the total number of mobile loans accounting for 78 percent of all the loans disbursed during the year.
“On a daily basis we are receiving 50,000 loan applications from Equitel. Those borrowing for a month we are seeing an average loan of Sh7, 000 ; those borrowing for three months we are seeing an average loan of 40,000 and those borrowing up to a year we are seeing an average borrowing of up to Sh120,000 with most of the loans being applied for at 5am in the morning,” Mwangi stated.
The firm reported Sh17.3 billion in net profit in the period under review a one percent increase compared to 2014’s Sh17.2 billion. Pre -tax profit stood at Sh23.9 billion representing a 12 percent growth compared to Sh22.3 billion recorded in 2014.
“The tax rate in 2015 is much higher than 2014 and it’s because in the profit of 2014 there was a capital gain of Sh1.6 billion the profit we made out of sale our shares in Housing Finance. That was not taxable, that explains the difference between the net and the gross profit,” Mwangi explained.
The group’s loan portfolio stood at Sh303 billion in the period under review up from Sh214 billion recorded in 2014 while total assets grew to Sh428 billion up from Sh344 billion recorded same period previous year.
The group however suffered from the currency turmoil that was experienced in 2015 that saw South Sudan devalue its currency by 84 percent while Uganda and Tanzania shillings depreciated by 10 percent and 12 percent respectively.
The group registered a total revaluation reserve loss of Sh6.8 billon made up of exchange loss on transaction of foreign investments of Sh5.7 billion and loss on fair valuation of treasury investments of Sh1.1 billion.
Regional banking subsidiaries contributed 23 percent of total assets, 23 percent of total deposits, 17 percent of loan book and 6 percent of total group profits.
The regional banking subsidiaries recorded a 43 percent growth in profits on the back of 73 percent growth of their loan books.