This archive report was first published on 12 November 2019.
Equity Group has made a significant comeback in the banking sector, announcing a Ksh. 17.5 billion net profit in nine months.
The period to September 30 saw the bank's customer lending and non-funded income growth increase, with the loan book to customers soaring 21 percent to Ksh. 348.9 billion.
Equity's Managing Director, James Mwangi, attributed the bank's success to its ability to reinvent itself in the last three years, saying, “Essentially the bank has been able to reinvent itself in the last three years, and hence, we are where we were before the entry of interest rate caps.”
The bank's earnings represent a 10 percent jump in earnings from a similar period last year, with the lender's continued pursuit of agility in its balance sheet against the stay of interest rate caps.
Equity's non-interest funded income (NFI) reversed its decline from last year, registering a 14 percent jump in the revenue stream to Ksh. 22.5 billion, attributed to greater processing of digital payments.
The bank significantly reduced its investment in risk-free government securities, with the packing of funds in the Treasury increasing by just five percent.
Equity found efficiency in relying on third-party infrastructure and digital channels to contain operational costs, with 93 percent of the bank's transaction count in lending now sitting outside the branch.
The lender marked an improvement in its cost-to-income ratio (CIR) to a low 51.3 percent at group level, with its Kenyan outfit regaining the lowered CIR trajectory to post a cost-to-income ratio of 45.9 percent from 47 percent last year.
Moreover, the bank cut its exposure to bad loans, with the ratio of Non-Performing Loans (NPLs) coming down further to 8.3 percent against a 12.6 percent industry average.
Equity expects the newly defined business model to keep the lender's financial performance on a positive trajectory, with the recent repeal of interest rate caps on commercial lending seen as a bonus.
