Equity Group, Kenya’s biggest bank by market capitalisation, has reported a 12.5 per cent growth in net profit in the first half of 2024, despite difficult macroeconomic conditions that saw businesses and individuals default on loans.
On Monday, the lender reported $229 million (KES29.6 billion) in net profit, up from $203.4 (KES26.3 billion) in half-year 2023, on strong interest income performance. Equity Group’s interest income rose 22 per cent to $656 million (KES84.8 billion) against high inflation and interest rates.
Equity Group’s performance comes when top Kenyan banks are betting on regional expansion as growth slows in East Africa’s biggest economy.
"We are now a regional bank, with the bank slowly moving half the balance sheet and P&L out of Kenya,” said James Mwangi, group managing director and CEO.
Mwangi indicated that the group’s regional subsidiaries have improved efficiency, contributing 47 per cent to the group’s balance sheet in terms of deposits and loans, and driving a 55 per cent revenue growth.
The bank also recorded a steady non-interest income growth by 16 per cent to $737.2 (KES95.1 billion). Customer deposits grew 11 per cent year-on-year to $10 billion (KES1.3 trillion), and its customer base now is 20.7 million.
The growth in deposits saw a 55 per cent increase in cash and cash equivalents to $2.6 billion (KES341 billion) and growth in investment securities to $3.5 billion (KES459 billion), giving the lender a strong liquidity position.
Equity’s gross non-performing loans (NPLs) grew 4.4 per cent to $929.4 billion (KES119.9 billion), forcing the lender to increase provisions for loan defaults by 35 per cent to $65.8 million (KES8.5 billion). The Central Bank requires Kenyan banks to set aside funds to cover loans where borrowers fail to pay principal or interest for 90 days.
"We are proud that Equity Group has a sufficient cushion on its key balance sheet buffers being liquidity, capital and NPL coverage while at the same time, it continues to report above industry profitability metrics,’’ Mwangi noted.