Equity Group’s net profit has increased by 36 per cent to Sh24.4 billion from Sh17.9 billion in the first half of 2022/2023 fiscal year.
According to the lender, this is due to higher lending and good non-funded income performance, which was aided by a 28 per cent increase in revenue from lending to clients and the government.
“The loan growth was targeted to supporting our clients to recover and rebuild after the Covid-19 business disruptions while allowing re-purposing and retooling for resilience and agility to take advantage of emerging opportunities and green shoots in the real economy, “ the group’s CEO James Mwangi stated.
Mwangi also claimed that trade missions to the Democratic Republic of the Congo, which increased trade financing and currency trading from cross-border deals, were responsible for the increase in profits.
Equity Bank claims to have managed loan portfolios through market diversification and credit risk insurance provided by development finance organizations.
Strong returns from loans to the government and commercial sector caused interest income to shoot by Sh12.2 billion, from Sh42.8 billion to Sh54. 9 billion.
The bank’s non-funded revenue increased by 24.6 per cent to Sh25.8 billion, and its loan book increased by 29 per cent over same time, from Sh504.8 billion to Ksh650.6 billion.
Personal internet transactions increased by 1,081 per cent year over year from 600,000 to 7.5 million transactions, with a 36 per cent increase in value from Sh39.5 billion to Sh184 billion.
Only Sh8.1 billion of the additional Sh114 billion portfolio that was awarded moratoria in 2020 has resumed repayment, with Sh2.7 billion in default.
“About 39 per cent of our total income is non-funded income which is not consuming capital supporting what is coming from the loan book and fixed income,” said Mwangi.
Digital consumer-to-business retail transactions made through Pay with Equity retail merchants increased by 382 per cent from Sh7.8 million to Sh37.5 million, with a value increase of 314 per cent from Sh42.2 billion to Sh174.8 billion.
The lender has also observed a turnaround in the performance of firms helped during the Covid-19 pandemic, with roughly a third of the Sh171.4 billion in pandemic support fully repaid—Sh46.6 billion.
During the first half of the year, the lender’s business-to-consumer payments through the online Equity cash and liquidity management service EazzyBiz increased by 51per cent from Sh2.2 million transactions to Sh3.3 million transactions.
The lender reduced gross non-performing loans from Sh62.1 billion to Sh61 billion after recovering Covid-19 loans.
However, in order to boost coverage in the event of a default, the lender had to increase loan loss reserves from Sh2.9 billion to Sh4 billion.
Value increased from Sh637 billion to Sh966.7 billion by 52 per cent. The loan book of Equity Bank increased by 29 per cent to Sh650.6 billion from Sh504.8 billion.
The guarantees cover 40 to 60 per cent of Equity Bank’s exposure to small firms, allowing the bank to aggressively grow its loan book.
Equitel’s mobile transaction value increased by 62per cent from Sh844 billion to Sh1.366 trillion, while the value of transactions on the Equity mobile app increased by 97 per cent to Sh552.9 billion from Sh280.1 billion.
