Equity Bank has announced a 17.05 per cent increase in after tax profits for the full year 2012 driven by high interest income. File
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The regional banker, whose assets stand at Sh243 billion, said last year’s after-tax profits stood at Sh12 billion compared to Sh10.3 billion the previous year.
Equity Bank has posted a 16.5 per cent increase in net profit for the year ended December 2012 on high interest income which was realised during a period which the Central Bank was struggling to stabilise a volatile shilling.
The regional banker, whose assets stand at Sh243 billion, said last year’s after-tax profits stood at Sh12 billion compared to Sh10.3 billion the previous year.
Its Sh23.9 billion net interest income represented a 48 per cent increase from the Sh16.2 billion earned in 2011 when inflation and the currency was more stable.
The bank’s total income last year grew 28 per cent to Sh36.8 billion compared to 2011’s 28.7 billon while total operating expenses increased 22 per cent to Sh19.6 billion from Sh15.9 billion during a similar period.
“At 13 per cent as at the end of the fourth quarter, net interest margin has remained at a historically high level after increasing by 20 base points from the previous quarter,” said Dr James Mwangi, the bank’s chief executive officer.
“Asset yields remained high in the current elevated interest rate environment, although they came off slightly primarily due to lower yields on the bank’s government portfolio.”
Last year, banks benefited from Central Bank’s move to switch to a high interest rate environment in order to control inflation rates and stabilise a volatile shilling in 2011.
Though the regulator started to reduce the indicative Central Bank Rate in July 2012, banks were slow to transfer the reduction to their customers stating that they were still holding expensive fixed deposits.
Equity Bank lent out a total of Sh136 billion representing a 19 per cent growth from the previous year’s Sh114 billion with money lent to SME’s leading the pack with a 45.5 per cent volume contribution (Sh63.3 billion).
Consumer lending represented 30 per cent of total loan, large enterprises came in third at 10 per cent while lending to the agriculture sector was least with a three per cent share.
“Strategic growth of SME lending not only resulted in rapid growth in the loan book but its sustained quality despite the macro-economic environment,” the bank added.
The bank, whose share stood at Sh28.25 at the close of trading, has scheduled its annual general meeting for March 27 with the directors having recommended a first and final dividend of Sh1.25 per ordinary share.
If approved, this dividend, an increase from the previous year’s Sh1.00 per share, will see the bank pay out a total of Sh4.6 billion up from the previous year’s Sh3.7 billion.
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