KENYA – Equity Group has announced a 14% profit growth after tax for the year ended 31st December 2019 after making KSh22.6 billion (US$214.2m) compared to KSh19.8 billion (US$187.7m) in 2018.
The impressive performance registered during an interest capping period was driven by a 23% growth in loan book to KSh366.4 billion (US43.7bn) from KSh297.2 billion (US$2.82bn) in 2018.
The growth in loan book saw the Group balance sheet register a 17% growth to reach KSh673.7 billion (US$6.39bn) up from KSh573.4 billion (US$5.43bn) funded by a growth in customer deposits of 14%, shareholders’ funds of 18% and a 26% growth of long-term borrowed funds.
“Execution of the Group’s business strategy continued to yield results as non-funded income contributed 40% of the Group’s total income reflecting quality and diversification of income,” Dr. James Mwangi, Managing Director and CEO said.
“Success in our regional expansion and business diversification saw subsidiaries contribution to Group profit after tax rise to 18% up from 15% the previous year.”
Return on average equity (RoAE) from subsidiaries grew to 16.9% up from 13.3%. Subsidiaries assets accounted for 27% of the Group’s total assets while their profit after tax contribution grew to 18% of Group’s profits up from 14% in 2018.
Improved efficiencies at the subsidiaries saw their cost structure contribution to the Group improve to 35% from 37% in 2018.
The Group continued to maintain an agile balance sheet with a liquidity of 52.1%, a loan deposit ratio of 75.9% and a core capital to risk weighted asset ratio of 19.8%.
“Our purpose of transforming lives, giving dignity and expanding opportunities for wealth creation and our vision of championing social economic prosperity of the people of Africa is driving our business. Our purpose has become profitable,” added Dr. James Mwangi.
In recognition of pressure on the asset quality and a challenging micro economic operating environment, the Group increased loan loss provision by 51% to KSh4.4 billion (US$41.7m) up from KSh2.9 billion (US$27.5m) in 2018 resulting in a cost of risk of 1.34% up from 1.02%.
Net NPLs exposure improved from KSh2.87 billion (US$27.2m) to KSh1.14 billion (US$10.8m).
Return on average assets (RoAA) remained at 3.6% while Return on average equity (RoAE) improved to 21.8% up from 21.1% against a Group cost of capital of 18.7%.
With a 14% growth in earnings per share, the Board of Directors have proposed a 25% enhanced dividend payout.