Equity Bank #ticker:EQTY has posted Sh5.2 billion in net profits for the period ended March 31, 2020, a 14 percent decline from Sh6.1 billion in a similar period last year.
The lender has been hit by growing bad loans which rose from Sh29.3 billion to Sh44.6 billion, mainly traders whose supply chains have been disrupted by impact of the coronavirus.
Equity Bank decided to take a huge hit by providing for the bad loans setting aside Sh3.1 billion in loan loss provision up from just Sh409 million last year.
“The global COVID 19 pandemic has mutated into a global economic crisis, occasioned by a sudden standstill of economic activity as a result of the global lockdown. This has introduced unprecedented uncertainty within the global financial systems prompting us to adopt a conservative approach fortifying our balance sheet and assuring ample liquidity to support our customers,” said Equity chief executive James Mwangi.
Equity Bank, which has restructured Sh92 billion or 25.1 percent of its loan book due to the pandemic’s decided to recall proposed dividend payout of Sh2.50 per share or a total of Sh9.4 billion to conserve cash as the coronavirus bites.
The lender’s loan book has however grown from Sh305.5 billion to Sh379.2 billion boosting interest incomes from Sh13.4 billion to Sh15.4 billion.
Non-interest income grew by 15.7 per cent to Sh8.3 billion with the lender finding ways to make money outside loans including handling large volumes of diaspora inflows which saw forex trading income grow by 34 per cent to Sh1.1 billion up from Sh815million.
Diaspora remittances commissions grew by 22 per cent to Sh234million up from Sh192million the previous year with the volume of diaspora remittances growing by 31 per cent to reach Sh40.6 billion up from Sh30.9 billion.