Equity Group has defied Covid-19 impacts and registers 51 per cent balance sheet growth in 2020 full-year.
According to Equity Group Managing Director James Mwangi, the group took risk management measures to protect the loan book by partnering with various institutions to obtain credit guarantees to deal with uncertainties and shocks.
“The Group, through these strategies, managed to weather the Covid-19 pandemic to grow by 51 per cent in its balance sheet which grew to one trillion and fifteen billion shillings up from 674 billion shillings the previous year,” he said.
The customer deposit grew to Sh741 billion up from 483 billion.
The profit after tax contribution from business outside Kenya grew to 28 per cent from 18 per cent.
“Commissions from Diaspora remittances grew by 76 per cent to Ksh. 1.5 billion up from Ksh 0.9 billion while the forex trading increased by 51 per cent to Ksh 863 billion shillings,” he said.
“Our biggest growth was in the non-funded income which grew by 27 per cent from 30 Billion to 38 Billion. Digitization enabled 98 per cent of all Group transactions to happen outside the branches.”
The Group’s net interest income grew by 23 per cent to Ksh 55 billion up from Ksh 45 billion driven by a 30 per cent growth in customer loan book and 26 per cent growth in Government securities.
However, the Group has reported an 11.6 per cent decline in 2020 full-year earnings with profit down at Ksh.19.8 billion from Ksh.22.4 billion in 2019.
The profit decline is largely attributable to an elevated cover for potential loan defaults with the lender’s provisioning for the same rising five times to Ksh.26.6 billion from Ksh.5.3 billion as gross non-performing loans surged by 62 per cent to Ksh.59.4 billion.
The greater provisions have served to raise the bank’s total operating expenses to Ksh.72.7 billion from Ksh.44.3 billion.
Nevertheless, Equity’s operating income in the period rose by 23.6 per cent to Ksh.93.7 billion with both interest and non-interest funded income growing in the year.
The Group’s net interest income for instance rose by 22.4 per cent to Ksh.55.1 billion while non-funded income was up 25 per cent to Ksh.38.5 billion.
“We generally adopted a twin strategic approach of being defensive to our stakeholders including customers and staff but also an offensive approach of not wasting a good crisis, taking up opportunities presented by the market,” he said.
During the period, the Group merged its operations in the Democratic Republic Congo (DRC) with the Banque Commerciale du Congo (BCDC) to reach Ksh.1 trillion assets at the end of 2020.
The Group has further disclosed the restructure of Ksh.171 billion in customer loans in tandem with directions of the Central Bank of Kenya (CBK). Customers have nevertheless resumed payments on 30 per cent of the restructured books.
Subsequent to the profit decline, the board of Equity has withheld the declaration of a final dividend payment to shareholders citing the need to mitigate risks arising from its heavy capital-led expansion last year.
This is the second year for the bank shareholders to miss the payout with the bank pulling a Ksh.9.5 billion total dividend settlement to shareholders in 2020.
Nevertheless, the Group now expects to leverage its sizable balance sheet to further its growth and enhance future dividends to shareholders.
“When we look into the future, we are confident that we have repurposed and retooled ourselves to speak to changing demographics and technology. We have ended the year well-positioned to rebuild with a Ksh.1 trillion balance sheet, enjoy economies of scale from our nearly Ksh.500 billion in liquid assets,” Mwangi added.
