The Lower Eastern Times Opening The Third Eye
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Equity Bank Group saw a significant 25.2% increase in its Q1 profit, reaching Sh16 billion, attributed mainly to robust growth across its subsidiaries.
The bank’s MD and CEO, James Mwangi, credited this growth to strong leadership decisions and a flexible balance sheet.
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Mwangi highlighted that strategic moves led to an 11% increase in deposit placements, despite a slower growth rate compared to the previous year. However, the Group experienced a 21% decrease in long-term borrowed funds due to paying off high-cost dollar-denominated loans.
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To mitigate elevated credit risk, the bank adjusted its lending strategy, resulting in a modest 3% growth in the loan book and a shift towards public-sector lending. This adjustment led to a drop in the cost of credit risk from 4.4% to 2.9%.
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Despite slower customer deposit growth, interest income increased by 33%, accelerating the growth of net interest income to 28%. Provisions also increased but at a lower rate than the previous year, indicating improved asset quality.
The Group’s regional banking subsidiaries significantly contributed to its profits, accounting for 63% of the total profit before tax. Equity Bank Group solidified its position as the second largest bank in East Africa by assets, reaching Sh1.7 trillion.
The bank’s risk management framework, coupled with strong capital and liquidity buffers, played a crucial role in navigating challenges and making bold decisions. Group liquidity stood at 52.1%, supported by a balanced balance sheet split between loans and liquid assets.
With a focus on financial inclusion, the Group diversified its loan portfolio across various sectors, reducing credit risk concentration. Although non-performing loans (NPLs) peaked at 13%, they remained below industry averages, with a coverage ratio of 68%.
Overall, Equity Bank Group’s Q1 performance reflects its resilience and strategic adaptability in a dynamic financial landscape.
