Kenya’s biggest bank by market capitalisation Equity Group has reported a 12.5% growth in net profit in H1 2024. This is against a backdrop of continued macroeconomic headwinds of high interest rates and volatile exchange rates across the markets in which the Group operates.
On Monday, the lender reported a half-year Profit after Tax of Kshs.29.6 billion up from Ksh.26.3 billion in half-year 2023
Regional subsidiaries accounted for 50.2% of the profit before tax for the period. The bank says this performance is coupled by strong capital buffers with core capital ratio of 15.8% and total capital ratio 18.4% versus regulatory threshold of 10.5% and 14.5% respectively.
The Group has also seen its deposit franchise grow 11% year on year to Kshs.1.3 trillion with its customer base now at 20.7 million. This growth in deposits has resulted in a 55% increase in cash and cash equivalents to Kshs.341 billion and growth in investment securities to Kshs.459 billion resulting in an overall strong liquidity position of 57%.
“We are optimistic that the strong liquidity of the Group has positioned us to effectively support our customers as the economy starts showing signs of improvement in the key markets we operate in, signaled by some of the regulators’ reduction of the Central Bank Reference rates. ” Dr. James Mwangi Equity Group Holdings Managing Director and Chief Executive Officer said.
”With the improved liquidity, the Group continued to optimize its balance sheet reducing leverage by Kshs.75 billion of expensive borrowings,” he added.
Shareholders’ funds grew by 13% to Kshs.220 billion while interest income grew by 22% to Kshs. 84.8billion from Kshs 69.8billion despite the high inflation and high interest shocks which saw returns to customers in the form of interest expense grow 30% to Kshs. 30.4 billion from Kshs. 23.4 billion. Non-funded income continues to grow steadily increasing by Kshs.5 billion and yielding a total income growth of 16% to Kshs.95.1 billion, up from Kshs.82.1 billion year on year.
The Group’s offensive strategy of regional and product diversification continues to bear fruit with Kenya banking subsidiary contributing 43% of revenue from 46% in the previous period. As business continues to grow in the DRC and with synergies realized from the Cogebanque acquisition in Rwanda, subsidiaries now account for 47% of total loans (2023- 44%) and contribute 51% of profit after tax.
The operating environment characterized by turbulent global macro-economic shocks saw the Group continuing with its defensive conservative and prudent approach with loan loss provisions growing by 35% to Kshs. 8.5 billion. This has seen NPL coverage ratios remain at 70% with a Non-Performing Loans (NPL) ratio of 12.9%, way below the latest published industry average of 16.3%.
The Group continues to make significant strides in its differentiated managerial capability and in enhancing its control environment to better position the Group to navigate the challenging macroeconomic and complex regulatory landscape while driving sustainable growth. The Group’s continued investment to modernize its infrastructure coupled by high inflation has seen its expenses increase by 27%.
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