Equity Group Posts 17% Decline in 3rd Quarter Earnings at Kes 14.8 Billion
Equity Group has reported a 17% decline in profit after tax which reduced to Kes 14.8 billion in nine months of the year to September, compared to Kes 17.3 billion the bank reported during the same period last year.
The decline is attributed to a sharp rise in loan loss provision to cover credit risks on customers whose cash flow has been impacted by COVID-19.
The lender says it set aside Kes. 14.3 billion during the period ending 30th September 2020 to cover non-performing loans compared to Kes. 1.3 billion in 2019.
The 86% rise in loan cover comes was due to the fact that despite the raging health pandemic, the lender managed to increase loan issuance which saw its loan book expand 30% book from Kes 348.9 billion in September 2019 to Kes 453.9 billion.
This saw interest earnings from loans grow by 22% to Kes 39.3 billion compared to Kes 32.3 billion during the same period last year as investment in government securities grew 34%.
“We grew our loan book by 30% year on year in order to support our customers who saw opportunities of green shoots and diversification in the COVID-19 environment. Most of the new opportunities we funded were in manufacturing of PPE’s, logistics, online businesses, agro-processing, fast-moving consumer goods, and agriculture value chains,” said Dr. James Mwangi, Equity Group CEO.
Non-funded income on the other hand grew 11% to Kes 24.4 billion from Kes 22 billion with total income growing by 17% to Kes 63.7 billion from Kes 54.3 billion.
Operating costs before provision grew by 8.16% with profit before provisions growing by 30.65%, the bank said.
The 45% growth in customer deposits to Kes 691 billion was driven by the 51% growth registered in its operations in Uganda, 21% growth in Kenya, and an additional Kes 130 billion it amassed from the acquisition of BCDC in the Democratic Republic of Congo.
The Group says its Kenyan operations which have been a key catalyst for growth is now being countered by favorable performance in regional subsidiaries which now account for 40% of total deposits, 39% total assets, 33% of the loan book, 30% of revenue and 25% of the Group’s profit before tax.
The balance sheet of the Group grew by 38% from Kes. 677.1 billion to reach Kes. 934 billion.