Equity Group, Kenya’s biggest bank by market capitalisation, has reported a 12.5% growth in net profit in H1 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% to $656 million (KES84.8 billion) against high inflation and interest rates.
Equity Group’s strong performance comes when top Kenyan banks are betting on regional expansion as growth slows in East Africa’s biggest economy. Double-digit growth in the region has offset a dip in earnings from Kenyan operations.
“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.
“The group’s regional subsidiaries have improved efficiency, contributing 47% to the group’s balance sheet in terms of deposits and loans, and driving a 55% revenue growth.”
The bank also recorded a steady non-interest income growth by 16% to $737.2 (KES95.1 billion). Customer deposits grew 11% 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% 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% to $929.4 billion (KES119.9 billion), forcing the lender to increase provisions for loan defaults by 35% 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 said.
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