Equity Group has raised its dividend payout for the year ended December 2024 to Sh4.25 per share from Sh4 per share in 2023 after reporting a 10.8 percent increase in net profit to Sh46.5 billion.
The bank will distribute Sh16 billion in total, up from Sh15.1 billion a year earlier, and the dividend will be payable to shareholders on the register as of May 23.
The bank’s profit growth was largely driven by growth in non-interest income and a cut in provisions for bad loans that the lender’s chief executive James Mwangi attributed to improvement in the quality of the loan book.
Equity slashed its loan loss provision by 43.3 percent or Sh15.4 billion to Sh 20.2 billion, largely on the Kenyan bank operation, even as its stock of gross non-performing loans went up, by 6.5 percent to Sh122 billion.
“The NPL ratio remained below the industry average at 12.2 percent, significantly lower than the 16.4 percent published industry average. NPL coverage stands at 71 percent, reinforcing the Group’s strongest quality,” Mr Mwangi said when presenting the financial results on Thursday.
Non-funded income went up by 10.6 percent to Sh85.07 billion, while net interest income was up 3.7 percent to Sh108.7 billion.
The lender’s net interest income was hit by a 20.3 percent jump in interest expenses to Sh61.6 billion, largely on account of paying higher interest rates on customer deposits in Kenya.
Equity Bank Kenya’s net profit dropped by 9.7 percent to Sh24.1 billion, from Sh26.7 billion in 2023.
The unit saw a decline in net interest income and non-funded income in the period, by 1.2 percent and 0.9 percent to Sh56.5 billion and Sh32.8 billion, respectively.
The Kenyan bank was weighed down by a 54 percent jump in interest expenses on customer loans to Sh39.9 billion.
As a result, regional subsidiaries increased their share of the group’s net profit to 50 percent from 41 percent in 2023. The most profitable unit outside Kenya remained Equity BCDC in the Democratic Republic of Congo (DRC), which reported a net profit growth of 29 percent to Sh15.6 billion, meaning that it accounted for 32 percent of the group’s bottom line.
Equity Bank Rwanda followed with a profit after tax of Sh5.4 billion, representing a year-on-year growth of 30 percent.
On the asset side, Equity’s loan book shrunk by 7.6 percent or Sh68.2 billion to Sh819.2 billion, which was attributed to forex losses when translating the financials of regional subsidiaries from their currencies to the Kenya shilling.
This was after the shilling’s gains in the forex market last year, particularly against the dollar (21 percent) which accounts for 40 percent of the lender’s balance sheet.
Customer deposits meanwhile grew by three percent to Sh1.4 trillion, with the loan-to-deposit ratio(LDR) standing at 58.5 percent, down from 60.8 percent in 2023. LDR helps to assess a bank's liquidity and credit risk by comparing its loans to its deposits.
