Equity Group Holdings net profit soars 28pc to Sh17bn

Equity Group Holdings, the parent to Equity Bank, posted a 27.8 per cent net profit growth in the year ended December, helped by increased lending and transaction-based income.

The lender’s net profit in the period stood at Sh17.15 billion compared to Sh13.42 billion the year before.

This came as interest income rose 10.9 per cent to Sh35.3 billion on increased lending that saw the loan book grow by a quarter to Sh214 billion.

Other income, including fees charged on transactions, increased by a fifth to Sh18.4 billion.

Group CEO James Mwangi attributed the performance to a strategic initiative, dubbed ‘Equity 3.0’, to stabilise growth through diversification and reducing the impact of the volatility associated with interest income.

“Time seems to be fast approaching when banks may not continue to exist as they are constituted today even though banking services will undoubtedly continue to be required,” he said. “Equity Group’s innovations are informed by this reality.”

All the regional subsidiaries recorded improved performance, which resulted in a consolidated profit contribution from Rwanda, South Sudan, Tanzania and Uganda of Sh1.07 billion, up from Sh240 million the previous year.

The Group successfully completed a reorganization that saw the creation of a listed non-operating holding company, Equity Group Holdings Limited, following the hiving off of the banking business in Kenya to a new subsidiary Equity Bank Kenya Limited.

The restructuring and other related one-off set-up costs impacted the cost income ratio adversely, resulting in an increase from 48 per cent in 2013 to 52 per cent last year.

Equity Group Holdings also booked a Sh1 billion gain from its sale of a 24.7 per cent interest in Housing Finance to insurance group Britam. This offset the overall impact of non-recurring expenses of Sh800 million used in a restructuring.

The bank declared a dividend of Sh1.8 per share, up from Sh1.5 paid for the previous period.