Equity Bank (EQTY) has recorded a decline of 6.1 percent in net profit to Sh 4.8 Billion for the first three months of 2017. The decline was attributed to reduced interest income on customer loans following rate caps which came into effect in September last year.
Equity Bank’s loan book slipped by Sh 13 Billion to Sh 262 Billion as its net interest income from customer loans fell by 37% to Sh 8.1 Billion. Over this period, the bank increased its loan loss provision by 11.5% to Sh 796.9 Million.
Interest income from government securities grew by 57% to Sh 2.96 Billion.
Speaking during the investor briefing, the Group Chief Executive Officer Dr. James Mwangi said, “A cautious approach in credit underwriting because of inability to price risk saw the loan book decline by 5% from Sh 275 Billion to Sh 262 Billion. The increase in funding was invested in government securities which on a risk adjusted basis currently yields similarly to loans, and yielded about 12%. Government securities grew by 81% from Sh 62 Billion to Sh 113 Billion with the highest growth experienced in the Kenyan market where government securities grew by 154% from Sh 42 Billion to Sh 105Billion.”
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