Equity Group Posts Ksh 29.6 Billion Profit in H1 2024

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Equity Group made a profit of Ksh 29.6 billion in the first six months of 2024, an impressive 12% year on year growth, with regional subsidiaries contributing 50.2%.

Notably, this performance was supported by strong capital buffers, with a core capital ratio of 15.8% and a total capital ratio of 18.4%, both well above the regulatory thresholds of 10.5% and 14.5%, respectively.

The group recorded a balance sheet growth of 6%, above the current inflation rate of 4%, with Equity group’s total assets hitting Ksh 1.75 trillion as of 30^th June 2024. Regional subsidiaries impressively accounted for 49.7%.

Customer deposits also saw an 11% rise to Ksh 1.3 trillion, resulting in a 55% increase in cash and cash equivalents to Ksh 341 billion and growth in investment securities to Ksh 459 billion.

Consequently, Equity Group’s liquidity position strongly stands at 57%. Currently, Equity Group’s customer base is 20.7 million.

While releasing the half year results, Dr. James Mwangi, Equity Group Holdings Managing Director and Chief Executive Officer, emphasized the importance of Equity Group’s strong liquidity.

“We are optimistic that the strong liquidity of the Group has positioned us to effectively support our customers as the economy starts showing signs of improvement in the key markets we operate in, signaled by some of the regulators’ reduction of the Central Bank Reference rates.” Dr. Mwangi said.

“With the improved liquidity, the Group continued to optimize its balance sheet reducing leverage by Kshs.75 billion of expensive borrowings.” he added.

Interest income grew by 22% to Ksh 84.4 billion, up from Ksh 69.8 billion recorded at the same period last year. This is despite the high inflation and high interest rates that saw returns to customers in the form of interest expense grow to Ksh 30.4 billion from Ksh 23.4 billion, a 30% difference.

Non-funded income increased to Ksh 5 billion, yielding a 16% total income growth to Ksh 95.1 billion, up from Ksh 82.1 billion recorded at the same period in 2023.

Read: KCB Bank Tanzania Posts TZS 26.1 Billion Profit After Tax for H1 2024

Shareholder’s funds grew by 13% to Ksh 220 billion. This in return strengthened the Group’s ability to underpin the private sector led Africa Resilience and Recovery Plan (ARRP) by investing in new subsidiary undertakings in the Insurance Group.

Additionally, it positions Equity Group well to continue taking advantage of any market opportunities similar to the acquisition made in Rwanda in 2023.

“We are proud that the Group has sufficient cushion on its key balance sheet buffers being liquidity, capital and NPL coverage while at the same time it continues to report above industry profitability metrices with return of average equity of 26.7% and return on average assets of 3.4%,’’ Dr. Mwangi noted.

Loan loss provisions grew by 35% to Ksh 8.5 billion, which has seen NPL coverage ratios remain at 70% with a Non-Performing Loans (NPL) ratio of 12.9%, way below the latest published industry average of 16.3%.

Additionally, the Group’s continued investment to modernize its infrastructure coupled by high inflation has seen its expenses increase by 27%.

The Group’s offensive strategy of regional and product diversification continues to bear fruit with Kenya banking subsidiary contributing 43% of revenue from 46% in the previous period.

As business continues to grow in the DRC and with synergies realized from the Cogebanque acquisition in Rwanda, subsidiaries now account for 47% of total loans (2023- 44%) and contribute 51% of profit after tax.