CEO James Mwangi says subsidiaries in Tanzania, Uganda and the Democratic Republic of Congo (DRC) are set for stronger performance in 2018, pushing their share of profits in the group from 18 per cent to between 20 and 25 per cent.
Equity Group #ticker:EQTY CEO James Mwangi is counting on relative calm in neighbouring countries and increased investments to push the share of subsidiaries’ profit to at least a fifth of the group’s performance this year.
Mr Mwangi says subsidiaries in Tanzania, Uganda and the Democratic Republic of Congo (DRC) are set for stronger performance in 2018, pushing their share of profits in the group from 18 per cent to between 20 and 25 per cent.
“The region is depicting a strong economic growth outlook. Our group’s strategy of regional and business diversification has resulted in a double-digit growth across the subsidiaries by September,” said Mr Mwangi during the release of the lender’s third quarter results last week.
In the nine months to end of September 2018, all the five subsidiaries posted double-digit percentage growth, pushing their contribution to the group’s net profit from 14 per cent in the third quarter of last year to 18 per cent.
Subsidiaries’ net profits grew by 37 per cent to Sh2.9 billion compared to Equity Bank Kenya’s growth of three per cent to Sh12.79 billion.
According to Mr Mwangi, rate cap laws in Kenya had slowed growth but offered the group an opportunity to target the region with key investments.
“The performance gives us the confidence to explore other opportunities to buttress our unique offering across the region. The subsidiary businesses have shown resilience and we believe they have more headroom for growth across board,” he said.
During the period under review, subsidiaries’ loan book moved from 22 to 25 per cent or Sh72.1 billion.
Lending in Uganda grew by 42 per cent to Sh17.4 billion followed by Rwanda (40 per cent to Sh13.9 billion) and DRC at 19 per cent to Sh24 billion.
The DRC subsidiary grew its bottom-line the fastest by more than doubling its net profit to Sh600 million due to increased investment in branch network and growth in customers.
The group has rolled out the EazzyBanking suite of digital solutions in Uganda, Rwanda and Tanzania as it targets more customers at digital touch points.
The lender targets to make subsidiaries contribute 40 per cent of overall profitability within the next five years.
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Note: The results are not exact but very close to the actual.
