Equity Bank Group #ticker:EQTY has attributed a Sh3.86 billion surge in rental costs for its offices and branches in 2018 to the recent relocation of Ugandan headquarters to a new building in Kampala and renewal of leases on the verge of expiry in Kenya.
The costs of the lender’s leases went up 53.2 per cent to Sh11.12 billion last year from Sh7.26 billion in 2017, despite the lender championing a freeze on new brick-and-mortar branches and heavily adopting agency banking.
“Many leases expired in 2018. Sixty-seven leases expired in Kenya alone. Therefore, the disclosure in 2017 was carrying a very small amount but after renewal the amount spikes. This contributes to a Sh2.5 billion increase,” said Equity Bank Group chief executive James Mwangi told the Business Daily in interview.
Equity Bank Uganda last September moved its head office to the ultramodern Church House on Kampala Road from Katwe.
The building that houses the head office as well as a bank branch is a 16-floor commercial office block in the heart of Kampala, directly opposite the Bank of Uganda.
The new head office occupies three floors, signalling the growth projections that the bank envisages in the next phase of its expansion .
“The Uganda move to the head office lease was signed in August 2018. This was not there in 2017 and contributed Sh600 million to the increase in the disclosure,” said Mr Mwangi.
Equity announced a freeze on the opening of new branches, marking the lender’s shift to digital banking services in October 2016.
Mr Mwangi then said the lender had moved most of its services away from the traditional across-the-counter branches to online platforms.
The digital banking service was to be supported by Equity’s new IT platform set up over the years at a cost of Sh20 billion, he said.
Customers with the help of a mobile application can access services such as opening of new accounts, applying for loans and making utility payments via mobile devices. “We have all witnessed how rapid adoption of mobile and other digital channels have transformed how people bank,” he said.