Equity Group’s profit after tax for the quarter ending March 31, 2022, has grown by 36 percent to Ksh11.9 billion up from Ksh8.7 billion the previous year. Return on Average assets improved to 3.7 percent up from 3.3 percent with return on average equity growing to 27.4 percent up from 25.1 percent. Earnings per share grew by 34 percent to Ksh3.10 up from Ksh2.30.
Shareholder funds increased to Ksh176.2 billion as of December 31, 2021, up from Ksh111.8 billion as at December 31, 2019. Cost of risk peaked at 6.1 percent for the year ended December 31, 2020, from the normalized cycle of 1.5 percent to increase NPL coverage to 98.2 percent.
The Group’s liquidity ratio increased to 63.4 percent as at December 31, 2021 up from 52.1 percent at December 31, 2019, as the Group preserved cash. The loan/deposit ratio declined to 61.3 percent as at December 31, 2021, from a high of 75.9 percent as at December 31, 2019, with investment in cash equivalents and Government securities growing to Ksh636.9 billion or 48.8 percent of the entire balance sheet up from Ksh258.6 billion or 38.4 percent of balance sheet as at December 31, 2019.
For the year to March 31, 2022, the Group’s total assets and balance sheet grew by 19 percent from Ksh1,066.4 billion to Ksh1,269.5 billion compared to the corresponding period in the previous year while cash and cash equivalents declined by 31 percent from Ksh241 billion down to Ksh166.4 billion as the Group resumed aggressive lending. Net loans grew 28 percent to Ksh623.6 billion up from Ksh487.7 billion while investments in Government securities grew by 50 percent to Ksh389.4 billion up from Ksh258.9 billion. This saw interest-earning assets grow by 35.7 percent. Asset reallocation from cash and cash equivalents to interest-earning assets resulted in net interest income growth of 31 percent to Ksh19.4 billion up from Ksh14.8 billion with a yield on earning assets growing to 9.5 percent up from 8.9 percent. Operating income grew by 21 percent to Ksh30.9 billion up from Ksh25.5 billion with non-funded income constituting 37.2 percent of the operating income.
The combined efficiency gains in net interest margin growth to 6.8 percent up from 6.4 percent. Total income grew by 21 percent while total operating costs grew by 13 percent. Cost income ratio declined to 45.3 percent down from 49.8 percent.
Equity Group’s regional subsidiaries continued to gain market share with their total revenue contribution to the Group growing to 40 percent to Ksh12.8 billion up from 37 percent Ksh9.6 billion.
The subsidiaries increased their profit after tax contribution to 30 percent Ksh3.6 billion of the Group’s profit after tax up from 21 percent (Ksh1.9 billion). Return on Average equity for subsidiaries stood at 23.6 percent against a cost of capital ratio of 21 percent with both Equity Bank Uganda and Equity Bank Rwanda joining Equity Bank Kenya to register return on average assets of above four percent, despite the asset reallocation liquidity marginally declined to 56.9 percent down from 60.6 percent which reflect on the size of headroom and opportunity for continued optimization of assets allocation and loan growth.
Non-performing loans declined to 8.6 percent down from 11.3 percent with cost of risk normalizing at 1.2 percent and non-performing loan coverage rising to 95 percent up from 87.4 percent.
Brick-and-mortar channels consisting of branches and ATMs handled only 2.9 percent of transactions while the digital channels of mobile, internet and third-party channels handled 97.1 percent of all transactions reflecting the success of the Group’s digital strategy.
On account of the strong strategic position of the Group and improving socio-economic environment the Group has rolled out the `Africa Recovery and Resilience Plan’ aimed at supporting the private sector quick recovery, repurpose and thrive by building back better by enhancing resilience.
Equity Group has seeded the Plan with Ksh700 billion to lend to 5 million Micro, Small and Medium Enterprises (MSMEs) while partnering with national Governments to provide the enabling micro economic and policy environment to enable private sector to thrive. Equity Group has partnered with IFC the private sector arm of the World Bank, African Development Bank and 10 European Development Banks to syndicate and finance the primary sectors of agriculture and mining, the manufacturing sector and trade and investment.
The Group has also partnered with the UN through national resident representatives in the six countries they operate in to facilitate capacity building for the MSMEs to ensure inclusivity and that nobody is left behind with social impact investment funding progress in society. Through the partnership with Mastercard Foundation of Young Africa Works which involves financial literacy and entrepreneurship training, credit risk sharing, and credit guarantees for MSME borrowing, the 5 million entrepreneurs will be able to create 50 million jobs directly and indirectly in the region. The Commonwealth Group have offered to partner with Equity to mainstream the Africa Recovery & Resilience Plan for their Commonwealth Heads of Government Meeting (CHOGM) in Rwanda in June.
