The lender made a net profit of Sh14.8 billion in the review period, down from Sh17.3 billion a year earlier.
The performance saw the bank overtake KCB Group, the country’s largest lender by assets, which reported a larger 43.1 percent drop in net earnings to Sh10.8 billion in the same period.
Equity’s provisions for bad debt jumped 7.8 times to Sh14.7 billion, hurting its bottom-line.
Equity Group #ticker:EQTY posted a 14.5 percent decline in net earnings in the nine months ended September on the back of increased provisions for coronavirus-related defaults.
The lender made a net profit of Sh14.8 billion in the review period, down from Sh17.3 billion a year earlier.
The performance saw the bank overtake KCB Group #ticker:KCB, the country’s largest lender by assets, which reported a larger 43.1 percent drop in net earnings to Sh10.8 billion in the same period.
Equity’s provisions for bad debt jumped 7.8 times to Sh14.7 billion, hurting its bottom-line.
“Maintaining its conservative and prudent approach and in recognition of the challenging operating environment, the group increased its loan book provision … registering a cost of risk of 4.8 percent up from 0.8 percent in the corresponding period last year,” Equity’s chief executive James Mwangi said in a statement.
The non-performing loans increased 69.4 percent to Sh51.7 billion, representing 11.4 percent of the total loan book.
The surge in provisioning drowned out higher earnings from lending, investment in government debt and transactions.
Total interest income, for instance, rose 21.7 percent to Sh52 billion while non-interest income jumped 10 percent to Sh24.8 billion.
Equity’s loan book expanded 30 percent to Sh453.8 billion while investment in government bonds and T-bills went up 37.1 percent to Sh185.2 billion.
“Execution of Equity Group’s twin strategy of being defensive and offensive has proven to be effective despite the challenging environment,” Mr Mwangi said.
Kenya confirmed its first case of coronavirus on March 12, setting off a series of public health measures that have hurt workers and companies’ earnings including closure of bars, ban on international travel and lockdown of counties like Nairobi and Mombasa.
Some of the restrictions have been removed but the economic damage, including defaults and restructuring of banks loans exceeding Sh1 trillion, is expected to linger for months.
Equity has restructured more than Sh90 billion worth of loans, deferring maturities of the credit facilities to offer relief to customers whose cashflows dropped due to the pandemic.
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