Equity Group’s 9-month Profit after Tax grew 13.1% to KSh 40.9 billion with regional subsidiaries accounting for 51% of the profit for the period. This is according to the group’s Q3 results released on Tuesday.
The Group has seen its deposit franchise grow 9% year-on-year to Kshs.1.3 trillion with its customer base now at 21.3 million. This growth in deposits has resulted in a 12% increase in cash and cash equivalents to Kshs.295.5 billion and growth in investment securities to Kshs.468.1 billion resulting in an overall strong liquidity position of 55%.
Shareholders’ funds grew by 17% to Kshs.227.0 billion strengthening the Group’s ability to deliver the private sector-led Africa Resilience and Recovery Plan (ARRP) by investing in new subsidiary undertakings in the Insurance Group as well as positioning the Group to continue to take advantage of any market opportunities.
The Group also registered robust top-line growth with interest income growing by 13% to Kshs. 125.9 billion from Kshs.111.1 billion during the period under review despite the high inflation and interest shocks which saw returns to customers in the form of interest expense grow 18% to Kshs.45.3 billion from Kshs.38.5 billion. Non-funded income continues to grow steadily, increasing by Kshs.2 billion and yielding a total income growth of 8% to Kshs.138.9 billion, up from Kshs.128.9 billion year-on-year.
Equity’s offensive strategy of regional and product diversification continues to bear fruit with the Kenya banking subsidiary contributing 47% of revenue from 52% in the previous period. As business continues to grow in the Democratic Republic of the Congo (DRC) and with synergies realized from the Cogebanque acquisition in Rwanda, subsidiaries now account for 47% of total loans, up from 46% in 2023, and contribute 47% of profit after tax.
The global operating environment characterized by macro-economic shocks saw the Group continuing with its conservative and prudent defensive approach by booking adequate loan loss provisions amounting to Kshs 12.7 billion. This has resulted in an NPL coverage ratio of 67% with a Non-Performing Loans (NPL) ratio of 13.4%, way below the latest published industry average of 16.7%.
The Group’s continued investment in modernizing its technology infrastructure coupled with high inflation has also seen its expenses excluding provisions increase by 19%.
“We are proud that the Group has sufficient cushion on its key balance sheet buffers of liquidity, capital and NPL coverage while at the same time it continues to report above industry average profitability with return on average equity of 24.5% and return on average assets of 3.1%,’’ Dr. James Mwangi, Equity Group Holdings Plc Managing Director and Chief Executive Officer said.
Equity says its transformation is technology-led and is enabling businesses under its One Equity offering, which enables self-services with unparalleled convenience based on freedom of channel choice. Digital channels dominate with 86% of transactions, Agency channels process 8% of transactions while ATMs, Merchant acquiring and branches each process 2% of transactions.
The Group has rolled out a common Product House that allows cross-selling and bundling of products under the One Equity offering – a one-stop shop for financial services.