- Equity has recorded a 99 per cent rise of its net profit to reach KSh 40.1 billion from KSh 20.1 billion
- Net interest income grew by 25 per cent to KSh 68.8 billion, up from KSh 55.1 billion, driven by a 23 per cent growth in loan book to KSh 587.8 billion
- Equity Group CEO James Mwangi said the bank has now strategically positioned itself as a systemic regional diversified business in six countries
Equity Group has recorded superior performance for the year ended 31st December 2021 despite the challenging operating environment of a global COVID-19 pandemic.
Profit After Tax increased by 99 per cent to KSh 40.1 billion from KSh 20.1 billion, with Profit Before Tax recording a growth of 134% to KSh 51.9 billion, up from KSh 22.2 billion the previous year.
The Group has recommended a record dividend pay-out of KSh 3 per share totalling KSh 11.3 billion which is a 50% jump from the previous dividend pay-out after earnings per share grew by 98% to KSh 10.40, up from KSh 5.20 the previous year.
Net interest income grew by 25% to KSh 68.8 billion, up from KSh 55.1 billion. This was driven by a 23% growth in loan book to KSh 587.8 billion, up from KSh 477.8 billion and an 81% growth in investment in Government securities to KSh 394.1 billion, up from KSh 217.4 billion.
Nonfunded income grew by 15% to KSh 43.6 billion, up from KSh 37.8 billion driven mainly by trade finance, payment channels and foreign exchange trading income. Trade finance registered a 55% growth in revenue to KSh 3.2 billion, up from KSh 2.1 billion.
Despite zero-rating mobile transaction offerings, transaction income grew by 37% to KSh 10.4 billion, up from KSh 7.6 billion on the E-commerce and Merchant banking business.
Foreign exchange trading income grew by 33% to KSh 8.3 billion, up from KSh 6.2 billion driven by diaspora inflows that grew 37% to reach KSh 383.5 billion, up from KSh 279.4 billion.
Total income grew by 21% to surpass the psychological USD 1 billion mark to record KSh 112.4 billion, up from KSh 92.9 billion the previous year.
Despite a 24% growth in staff costs to KSh 19.1 billion growth in other operating costs to KSh 36.5 billion up from the KSh 30.6 billion, total costs recorded a decline of 16% to KSh 60.5 billion, down from KSh 71.9 billion driven by an 81% decline in loan loss provision to KSh 4.9 billion down from KSh 25.9 billion the previous year.
Portfolio at risk declined to 8.3%, down from 11%, with non-performing loan coverage increasing to 98%, up from 89%. In absolute terms, total non-performing loans declined to KSh 44.5 billion, down from KSh 50.6 billion.
Total Assets grew by 29% to KSh 1.305 trillion, up from KSh 1.015 trillion driven by a corresponding 29% growth in customer deposits to KSh 959 billion up from KSh 740.8 billion, resulting in excess cash being deployed in low yielding government securities at 9.6 %. In comparison, the cost to income remained reasonably constant at 49.1%, up from 48.5%.
Return on Average Equity expanded to 26.1%, up from 15.3% while Return on Average Assets grew to 3.5% up from 2.3% on the back of benefits of economies of scale and efficiencies of digitisation and a shift of business model from fixed costs to variable cost resulting in the enhanced returns.
The bulk of customers’ engagement and consumption of banking products and services is now on digital internet and mobile channels on self-service devices, delivering 24-hour banking experience and convenience.
The Group’s offensive and defensive strategy has led to achieving the twin objective of securing the future while securing market gains of customer consolidation.
Equity Group CEO James Mwangi said the bank has now strategically positioned itself as a systemic regional diversified business in six countries. The dominant market in Kenya contributes only 59% and 63% of the Assets and Revenues, respectively.
Strict adherence to IFRS 9 has led to full recognition of lifetime risk in the Asset portfolio, with provisions for the portfolio at risk being 98% and 128% with credit risk guarantees.
“We have strengthened our business model to achieve an embedded shared value concept in our twin-engine of social and economic aspirations and deliverables. We have scaled our social and environmental impact investments in capacity building and enhancement through education, health, and entrepreneurship training,” said Dr Mwangi.
“We have strengthened our participation in formalising and integrating the informal sector in the real economy with the formal supply chains and ecosystems of agriculture, small, and medium enterprises. To strengthen the social contract of shared prosperity, Equity is celebrating the strong social brand and exceptional performance by offering 2,000 comprehensive Wings to Fly scholarships for four years at an anticipated cost of KSh 2 billion representing shared prosperity with host communities.”
Equity said it has a positive outlook on the future. Mwangi said they had launched a Marshall Plan’ Africa Recovery and Resilience Plan’ with a seed fund of USD 6 billion equivalent to KSh 690 billion to act as a stimulus for the private sector.
“We are optimistic that the ‘Africa Recovery and Resilience Plan’ holds great promise for Africa’s socio-economic prosperity, and Equity Group is well-positioned to catalyse this outcome,” concluded Dr Mwangi.