Equity Bank chief executive James Mwangi. The lender’s Kenyan operations posted an after-tax profit of Sh12.6 billion. FILE
What you need to know:
Equity Bank's domestic operations posted an after-tax profit of Sh12.6 billion, higher than that of its main rival KCB that was at Sh12.4 billion.
The lender's volatile regional businesses recorded a drop in profits resulting in KCB surpassing the younger lender in group performance and denying Equity the bragging rights.
Equity Bank was the fastest growing of the top banks in Kenya last year but its regional subsidiaries pulled it down, denying it top spot as the most profitable lender in the region.
The lender’s domestic operations posted an after-tax profit of Sh12.6 billion, higher than that of its main rival KCB that was at Sh12.4 billion.
Equity’s volatile regional businesses recorded a drop in profits resulting in KCB surpassing the younger lender in group performance and denying Equity the bragging rights.
“The group profit grew by 11 per cent, mainly impacted by the reduction in lending rates and South Sudan impairment of Sh700 million,” said Equity chief executive James Mwangi.
Equity Kenya recorded a 15 per cent growth attributable to increased lending while KCB group recorded a faster growth at 17 per cent, with its Kenyan unit growing 12 per cent.
Mr Mwangi said the lender had set aside Sh700 million as a precaution on expected negative impact of the violence in South Sudan.
KCB made a provision of Sh1 billion for South Sudan and an additional Sh1.2 billion for one-off restructuring costs. KCB also operates in six countries, one more than Equity which is absent in Burundi.
Equity lending in Kenya grew by Sh30 billion compared to KCB’s Sh11 billion. Equity’s Kenyan customers increased their deposits by Sh18 billion while KCB’s increased by Sh14 billion.
KCB’s performance underlines the growing importance of the regional businesses where Kenyan lenders encounter less competition owing to their larger size and the markets being relatively underdeveloped.
Equity also operates an insurance business that contributed Sh407 million and an investment arm that posted Sh11 million profit. KCB is yet to launch its investment banking business, having received approval earlier this month. Its insurance business is a few months old.
KCB has poached Equity’s head of bancassurance Winnie Mbugua, entrenching the competition between the two. Barclays Bank’s Kenya operations reported a 12.5 per cent drop in profits to Sh7.62 billion.
Other lenders that have announced their profits include NIC Bank and Housing Finance. NIC posted 16.4 per cent growth to Sh3.3 billion while Housing Finance posted a 34 per cent growth to Sh994 million. The Central Bank of Kenya reported a 16.5 per cent growth in the industry profits to a record Sh124.5 billion. The banking industry relied on savings on the interest they paid to customers after reducing lending rates at a slower pace than deposit rates.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
