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Equity subsidiaries lift Group’s profit to Sh5.9 billion in three months

Brent Malahay, Equity Bank Group Director Strategy, Partnerships and Investor Relations looks on as Equity Group Managing Director and CEO James Mwangi confers with one of the analysts during the release of the 2018 Q1 Financial Results at Equity Centre, Upper Hill

NAIROBI, Kenya, May 17 – Equity Group has announced a profit of Sh5.9 billion for the first three months of 2018, a 22 percent growth from the Sh4.9 billion it declared in 2017

Chief Executive James Mwangi attributes the rise in profits to significant increase in the Group’s subsidiaries that have grown their profits by 65 percent to Sh1.65 billion increasing their profit contribution from 14 percent to 19 percent of the Group’s total profit.

Equitel’s profitability grew by 204 percent, Equity Bank South Sudan by 291 percent, Equity Investment Bank by 481 percent, Tanzania by 68 percent, DRC by 78 percent, Rwanda by 58 percent and Uganda by 28 percent.

Non-funded income also contributed to the profits by 41 percent of the Group’s first quarter total income of Sh16.5 billion.

“Non-funded income streams saw trade finance income grow by 32 percent, merchant commissions by 23 percent, mobile banking commissions by 75 percent, Bond trading income by 152 percent, Swift & RTGS income by 45 percent and Diaspora Remittances by 183 percent. We are delivering the Group’s objective of de-risking concentration,” Mwangi said in an investor briefing on Thursday.

Customers’ deposits grew by 9 percent to reach Sh382.4 billion up from Sh349.3 billion, boosting the balance sheet to top half a trillion shillings with a customer base of 12.2 million.

Digital mobile lending saw 92 percent of all loans processed online, making banking intermediation what you do on devices rather than the place you go to.

Total income grew by 9 percent while total costs reduced by 1 percent and resulted in the Group’s cost income ratio improving to 47.5 percent from 49.4 percent the previous year.

Non Performing Loans remained at 6.3  percent against an industry average of 12 percent.

“The operating environment is showing signs of recovery across the region with the Group’s key market, Kenya, done with its elections and business activity starting to pick up. At the same time Kenya is planning to scrap interest rates capping that was introduced in September 2016. Across the region economic growth is expected to improve with Kenya’s GDP growth rate projected at 5.5 percent up from 4.8 percent. Uganda’s GDP projected to grow at 5.9 percent up from 4.8 percent, Rwanda’s GDP growth rate expected to reach 7.2 percent up from 6.1 percent,” he noted.

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Meanwhile, its main rival KCB made Sh5.18 billion in the period under review with their Non-interest income remaining relatively flat due to a drop in forex earnings largely attributable to low transaction volumes in South Sudan.

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