NAIROBI, Kenya, Mar 15 – Equity Group has recorded a 4 percent decline in the 2016 net profit to Sh15.2 billion from Sh16.1 billion posted in 2015.
The bank has attributed the decline to bad loans from the private sectors’ large corporations that have continued to hit the banking industry, with the interest rate cap limiting the Bank’s ability to spread risk.
Nonperforming loans went up by 55 percent to Sh15 billion from 2015’s Sh6 billion while loss loan provision hit Sh5 billion from 2015’s Sh1 billion.
Equity Group Chief Executive James Mwangi has said the Building and Construction, Trade and logistics industries have slowed in credit uptake and repayment.
“For trade companies, this is due to delay in payments while for logistics is due to a slowdown of economic activity,” he explained.
The loan book declined by one percent to Sh266 billion while customer deposits went up by 11 percent to Sh337 billion.
Total assets went up to Sh473 billion from Sh428 billion.
South Sudan currency devaluation hit the bank hard losing Sh500 million.
“On the regional front, the environment was characterized by uncertainties due to the electioneering in Tanzania and Uganda, the transitions in South Sudan and DRC, moreover the pending 2017 elections in Kenya and Rwanda played a role in slowing economic activities as investors exercised caution in their investment decisions,” Mwangi said in an investors briefing on Wednesday.
Customer base has increased to 11.1 million due to mobile banking channels under Equitel and Eazzy Banking App that has seen transactions grow from 200 million to 335 million.
Equitel customers have increased from 1.6 million to 2.7 million in the period under review.
“The group is well positioned to weather shocks from the environment as reflected in the group’s liquid and well-capitalized balance sheet. The group closed the year with liquidity levels of over 48 percent and total capital adequacy ratio of over 19 percent. Our value proposition to shareholders is solid and our strategy continues to pay off with Earnings per Share of Sh4.38. ” he added.
The Board has recommended a dividend payment totaling Sh7.5 billion.