Kenya: Equity Bank Group Q1 profit up 25.2 per cent to Sh16bn

Equity Bank Group’s net profit for the first three months of the year has risen to Sh16 billion from Sh12.8 billion in the same period last year, driven by growth across its subsidiaries.

Group MD and CEO, James Mwangi, attributed the growth in the bank’s Q1 results to strong leadership decision-making and a resilient balance sheet.

“Decisive actions saw growth in deposits placements to 11 per cent compared to the deposits growth of 29 per cent registered for the year ended December 31, 2023, as the Group skipped expensive deposits,” Equity Bank Group MD and CEO James Mwangi told investors on Monday.

However, growth in long-term borrowed funds saw a decline of 21 per cent year on year for the period ended 31st March 2024 as the Group paid out maturing repriced expensive dollar-denominated loans.

Due to an elevated credit risk environment characterized by high non-performing loans, the lender enhanced its credit risk underwriting. This resulted in a three per cent year-on-year growth in the loan book, compared to a 26 per cent growth rate for the year ended December 2023.

This also led to the reallocation of lending from private-sector credit to public-sector lending through government securities, which grew to 21 per cent.

Consequently, the cost of credit risk dropped to 2.9 per cent for the period from 4.4 per cent for the year ended December 31.

The loan-to-deposit ratio stood at 63 per cent as March 31 compared to 65.3 per cent in the corresponding quarter last year.

 There was slow customer deposit growth and a decline in long-term loans yielding a lower year-on-year growth of interest expense compared to 53 per cent for the year ended 2023.

Interest income for the period increased to 33 per cent, up from 30 per cent in December last year.

The growth of net interest income accelerated to 28 per cent for the period, compared to 21 per cent for the year ended December 31, 2023.

Provisions increased by 84 per cent, compared to 139 per cent last year, with non-performing loan coverage improving to 68.5 per cent from 67.3 per cent recorded last December.