Equity Bank half-year profit hits record $163.5 million
Tuesday August 17 2021
Equity Bank's stand during a trade fair in Rwanda. FILE PHOTO | NMG
Equity Group net profit for the first six months to June grew 98.4 percent to $163.5 million driven by growth in interest and non-interest income.
The group’s earnings rose from $84 million recorded in a similar period last year as revenues across the subsidiaries —except South Sudan—increased.
Equity other subsidiaries are in Tanzania, Rwanda, Uganda and DR Congo.
The half-year earnings are equivalent to 89.5 percent of the Sh20 billion the group posted in full-year 2020, placing it on a recovery path from coronavirus-induced economic hardships that had hit profits.
“The strong capital and liquidity ratios have positioned the group well for continued execution of the offensive strategy particularly in light of improving asset quality and an improving operating environment,” said James Mwangi, CEO at Equity Group at an investor briefing on Tuesday.
The lender cut loan loss provisioning 66 percent to $23.7 million in contrast with $69.4 million that had been made in the preceding similar period.
The $45.6 million cut to cover for loan defaults, added to the record half-year profits for the lender that last year beat KCB Group to top position on profitability.
Net interest income grew 26 percent to $285.1 million in line with 29 percent growth in loan book to $4.6 billion.
Non-interest income, which is mainly derived from fees and commission, rose by 45 percent to $186.4 million, giving the lender a high-income position.
Gross non-performing loans stood at $400.4 million at the end of June compared with $400.4 million, with the muted rise helped by recoveries and repayments.
All the subsidiaries —except South Sudan— posted growths in profit, taking their share in total earnings to 21 percent.
Equity’s rebound in performance came on the back of easing Covid-19 control measures that has triggered a gradual recovery in the economy, prompting banks to boost lending amid repayment of defaulted loans.
Slowed lending that followed reduced economic activity after Kenya’s first Covid-19 case in March 2020 and costs linked to mounting defaults that followed had cut lenders profits 29.5 percent last year.
Central Bank of Kenya (CBK) data shows that the pre-tax earnings in the five months had risen by 42 percent to $698.2 million from $492.5 million posted in a similar period last year.
CBK said manufacturing, agriculture, trade and real estate sectors have led to debt repayments and recoveries.