Equity Group defy Covid-19 pandemic to post 98% growth in half-year earnings

KENYA – Equity Group Holdings has defied the effects of COVID-19 pandemic on the economy to record a 98% growth in its profit after tax to Kshs 17.9 billion (US$163.5 million) in half-year, 2021 compared to Kshs 9.1 billion (US$83.1 million) over the first six months of 2020.

The Nairobi Securities Exchange-listed lender attributes this sterling performance to significant growth in customer deposits, which pushed its balance sheet size to Kshs 1.1 Trillion (US$10 billion) in half-year, 2021, a 51% growth from Kshs 746.5 Billion (US$6.8 billion) in half-year, 2020.

” We have seen significant recoveries in all the six countries where we operate, with the market bouncing back to the pre-COVID-19 growth trajectory,” said Dr. James Mwangi, Equity Group Managing Director and CEO.

He made these remarks at an investor briefing on 17th August 2021 at Equity Centre to announce Equity Group’s half-year 2021 financial results.

Highlights

Equity Group Net Interest Income from loans grew by 26% from Kshs 24.6 billion (US$224.7 million) to Kshs 31.2 billion (US$285 million) while Net Loans increased by 29% from Kshs 391.6 billion (US$3.6 billion) in half-year, 2020 to Kshs 504.8 billion (US$4.6 billion) at the end of the first six months of this year, 2021.

Customer deposits grew by 51% to Kshs 820.3 billion (US$7.7 billion) while Equity Group cut its provisions for loan losses by 66% from Kshs 7.7 billion (US$70.3 million) in half-year 2020 to Kshs 2.6 billion (US$23.75 million) in half-year, 2021.

Gross loan provisions declined significantly from Kshs 8 billion (US$73 million) in half-year, 2020 to Kshs 2.9 billion (US$26.5 million) in half-year, 2021.

The Group also increased its investment in Government securities by 46% to Kshs 315.5 billion (US$2.88 billion)  during the period under consideration. The level of borrowed funds also increased significantly by 51% to Kshs 820.3 billion (US$7.49 billion)

” We have seen significant recoveries in all the six countries where we operate, with the market bouncing back to the pre-COVID-19 growth trajectory”

James Mwangi – CEO, Equity Group

” We have revised the outlook for 2021 as customers take into account the pandemic as the new normal. Kenya is already outperforming the rest of our regional subsidiaries and we expect that increased COVID-19 vaccinations will enable it to recover and bounce back even faster than the rest of our markets,” said Dr. Mwangi.

He said Equity Group has now shifted 97% of its entire business from brick and mortar infrastructure to digital channels.

Figures indicate that the lender recorded 606.9 million transactions on its digital channels and only 19.6 million transactions via the legacy banking channels such as ATMs and Branches. In comparison, Diaspora remittances accounted for 4.9 million transactions during half-year, 2021.

Out of the Kshs 171 billion (US$1.56 billion) loans that were rescheduled by Equity Group due to the COVID-19 pandemic, customers have resumed repayment of Kshs 103 billion (US$940.8 million) and are expected to resume repayment on loans worth Kshs 56 billion (US$511.5 million) over the next 12 months.

Only Kshs 4 Billion (US$36.5 million) in this loan portfolio remains non-performing.

” We have seen a significant recovery in Democratic Republic of Congo, its economic recovery boosted by a steep increase in global commodity prices. Uganda is also doing well with revenues from its oil fields expected to support growth while Tanzania has been improving its links to neighboring countries and also rapidly reforming the operating environment for business to thrive,” said Dr. Mwangi.

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