Equity Bank Group continued to defy macro-economic turbulence to maintain steady growth and posted a 30% growth in pre-tax profit for the period ended 30th September 2012.
The group has posted a profit of Kshs.11.8 billion up from Kshs.9 billion realized in the third quarter of 2011. Profit after tax increased from Kshs.7.29 billion to Kshs. 8.3 billion in a similar period last year. These impressive results have been achieved despite challenging macro-economic environment characterized by high inflation and high interest rates for the better part of the year.
The Group’s capping of its lending interest rates to a maximum of 25%, while the average banking industry lending rates were above 30%, helped to grow the net loan book by 20% to Kshs.131.37 billion up from Kshs.109.37 billion. As a result, interest income grew by 67% to Kshs.22.6 billion up from Kshs. 13.5 billion realized in September 2011. The lending interest regime enabled the Group to defy the banking industry trend to improve its asset quality to 3% from 3.1% for the period under review. A credit rating report released during the investors briefing dated October 2012 by Global Credit Rating gave the bank a long term AA-. This is interpreted as “… very high credit quality…” and short-term AI+. Which means “... highest certainty of timely payment…” in line with the reported asset quality.
The high growth in interest income helped the Group smoothen the headwinds that affected non-interest income to register total revenue growth of 30% to Kshs.26.7 billion up from Kshs.20.5 billion.
Despite a moderate growth of 10% in customer deposits to Kshs.164.6 billion up from Kshs. 149.7 billion in September 2011, interest expense on customer deposits grew by 123% reflecting the high cost of funding driven by high interest rate regime. Inspite of the impressive 67% growth in interest income, the higher growth in interest expense resulted in the Group’s net interest income growing by 55% to Kshs.17.2 billion up from Kshs.11.1 billion for the corresponding period. Staff costs driven by the recruitment of additional senior managers and new employees for the subsidiaries in Tanzania and Rwanda grew by 44% while other operating expenses driven by high inflation grew by 30%.
Speaking during the announcement of the results, Equity Bank’s Group Managing Director Dr. James Mwangi said the bank will continue to support its customers in their efforts to realize their dreams. “We shall fully focus on our innovation agenda to ensure financial services become fully and conveniently accessible and affordable in our region of operations”.
Dr. Mwangi revealed that the number of depositors grew by 16% increasing by 1.1 million to 7.8 million customers from 6.7 million driven by agency banking and mobile banking. The number of the bank agents grew to 5,496 substantially reducing the cost of accessing banking services while delivering enormous convenience to its clients.
Total Assets posted a 19% growth during the period to close at Kshs.232 billion up from Kshs.195 billion with the most significant growth being achieved in loans to customers and cash and cash equivalents. The Bank maintained a strong capital position which grew by 24% to reach Kshs.39.2 billion up from Kshs.31.76 billion. The banks liquidity ratio stood at a strong of 42%.
Dr. Mwangi said the bank will now focus more on supporting and lending Small and Medium sized Enterprises (SMEs) to enable them to take advantage of the opportunities generated by implementation of Vision 2030 as well as high GDP growth in the region.
The bank has partnered with The MasterCard foundation and rolled out a financial literacy program that has so far trained over 450,000 youth and women out of the target 1 million beneficiaries by September 2013.
Dr. Mwangi further said the outlook for the remainder of 2012 was positive as interest and inflation rates decreased coupled with a stable foreign exchange environment.
Dr. Mwangi last month scooped the African Business Leader of the Year Award during the All African Business Leaders Awards Ceremony for his efforts in transforming lives across Africa through innovative financial services. Dr. Mwangi is also the recipient of the prestigious 2012 Ernst & Young World Entrepreneur of the Year Award.
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