This archive report was first published on 1 August 2019.
On August 1, 2019, Equity Group announced a notable surge in net profit for the first six months of 2019, reaching Ksh.12 billion, a 9% increase from the previous period.
The lender's success can be attributed to a rise in loan advancements to the private sector and a significant squeeze on operational efficiencies, including cost optimization through digitization.
While other banks have been hesitant to lend to the private sector due to high interest rates and the attractiveness of government securities, Equity Group has pushed more funds to households and businesses, making a greater killing from private sector lending compared to Treasury returns.
Equity Group Managing Director James Mwangi attributed the success to the bank's ability to extend credit to households and businesses without on-boarding additional risks, despite falling treasury yields.
“Like a hunter who learns how to shoot without missing, we have learnt to fly without perching,” Mwangi said.
Equity's yield on loans was up by 12.1% to Ksh.18.7 billion over the period, having pushed an additional sum of Ksh.45 billion in loans against a falling treasury return curve of 10%.
The bank has also managed to hold growth in its mobilization of funds, with its deposit pool growing by 16% to Ksh.458.6 billion.
Equity Group has maintained agility in its balance sheet, with a solid 56.5 liquidity ratio and a cost to income ratio below 53%.
