NAIROBI, Kenya, Oct 30 – Equity Group Holding has posted a 3 percent decline in net profit to Sh14bn in the third quarter of 2017 compared to Sh15.1bn same period last year.
The Chief Executive James Mwangi attributes the decline to a reduction in net interest income that went down by 15 percent to 27.9 billion compared to 32.3 billion in the third quarter of 2017.
Mwangi says Kenya operations was the worst performing in the region with an 8 percent negative growth adding that Equity Bank Uganda is set to outperform Kenya subsidiary in the full year financials.
“It has been a tough operating environment, but the group has maintained a resilient performance in a very challenging economic environment occasioned by political uncertainty and prolonged drought. However, a decline in the Private Sector credit growth is the single larger impact that has slowed the economy,” he said.
As a result of the interest rate capping, interest income on loans declined by 36 percent to Sh18.3bn compared to Sh28.5 billion last year.
However, deposits went up by 11 percent to 368.8bn with net loans dropped by 2 percent to Sh265.4bn
Mwangi says the banking sector has seen declining profits as a result of the rate cap law but adds that it has been a blessing in disguise. “It has made us focus on efficiency.”
Going forward the group is set to focus on Non funded income and treasury operations that have remained steady.
Interest income on government securities grew by 113 percent in the period under review while non-funded income grew by 28 percent to Sh21.3bn.
“The subsidiaries in Uganda, Rwanda and South Sudan, Tanzania and DR Congo collectively increased their profit by 53 percent year on year and enhanced their contribution to the group from 7 percent to 10 percent,” he added.