Equity Bank’s resilience affirmed with a 45% after tax profit surge

…largely boosted by cost saving new delivery channels and growth improvement of loan book.

Nairobi 8/3/2012…Regional banking group, Equity Bank strategic focus on its customer experience appear to have paid off with a 45 % after tax profit growth.

Despite the challenging micro economic environment characterised by high interest rates, high inflation and volatile exchange rates, Equity Bank restrained increasing its customers loan interest rates until mid November 2011, eventually capping its loan interest to 25% p.a in an environment where the average banking industry loan interest rate is 32%. As a result, Equity bank loan book grew by 45% from Kshs 78.3 billion to Kshs 113.8 billion while improving its non-performing loan from 4.5% to 2.8% ending with a net non-performing loan of 1.3% as a percentage of gross loan book.

Profit before tax surged by 42% to close at Kshs 12.83 billion up from Kshs 9.04 billion in the previous year while profit after tax grew by 45% to Kshs 10.33 billion up from Kshs 7.3 billion. Gross total income grew to reach Kshs 28.67 billion boosted by a 46% growth in interest income. Total operating expenses grew to Kshs 15.99 billion driven mainly by a 51% growth in interest expense.

Despite the challenging operating environment Equity Bank continued to focus on social and impact investments securing 7,300 secondary school scholarships under its Wings to Fly program co-funded by The MasterCard Foundation with support of USAID and UKaid. During the year, Equity Bank rolled out its 13 week financial literacy program dubbed FIKA that benefited 306,000 people.

Equity Group’s focus on innovative delivery channels in mobile telecommunications banking and agency banking helped reduce the cost income ratio to 50% boosting growth of earnings per share by 45% from  Kshs 1.93 to Kshs2.79. Shareholders proposed dividend grew by 25% from Kshs 2.9 billion to Kshs 3.7 billion with dividend per share growing from Kshs 0.80 to Kshs 1.

Speaking when he released the Bank’s 2011 full year results, Equity Bank Group CEO and Managing Director Dr James Mwangi disclosed that the bank had managed to grow its customer base to 7.15 million clients effectively placing the bank as the largest bank in Africa in terms of customer numbers. Customer deposits grew by 37% to stand at Kshs 144.16 billion up from Kshs 104.93 billion recorded in the previous year.

Dr Mwangi attributed the excellent performance under challenging global and local operating environment to benefits of past investment in ICT; innovation in delivery channels; investments particularly in mobile banking & agency banking; social & impact investments that have helped to build the Bank’s brand and focus on product, cost & risk management while leveraging on passion and enthusiasm of staff.

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