Equity Q1 profit soars to Sh8.7bn on income growth

By Seth Emmanuel

Equity Group net profit for the first three months to March jumped 64 per cent to Sh8.7 billion driven by strong growth in both interest and non-interest income.

The bank’s earnings rose from Sh5.3 billion recorded in a similar quarter in 2020, placing it on a recovery path from last year’s fall in profits on the back of coronavirus-induced economic hardships.

Net interest income grew 28 per cent to Sh14.8 billion in line with 29 per cent growth in loan book to Sh487.7 billion.

Non-interest income, which is mainly derived from fees and commission, rose by 30 per cent to Sh25.5 billion, giving the lender a high income position.

Equity’s operating costs rose by eight per cent to Sh13.8 billion despite provisioning for loan defaults reducing by 64 per cent to Sh1.1 billion in appreciation of the improving economic situation.

Of the Sh171 billion loans that had been restructured on Covid-19 hardships, customers have resumed repayment on Sh59 billion, with Sh5 billion already fully cleared.

The lender says it expects another Sh49 billion to be performing by June and Sh20 billion to enter the same status by September.

During the review period, Equity Group balance sheet expanded by 54 per cent to Sh1.07 trillion as customer deposits surged by 58 per cent to Sh790.6 billion.

The group’s liquidity ratio closed the quarter at 60.6 per cent, with that of the Kenyan unit being 81.5 per cent. The regulator requires a minimum of 20 per cent.