Equity Group’s profit after tax for the period ending 31 December 2023 declined by 5 per cent to KSh 43.7 billion from KSh 46.1 billion in 2022. The decline in profitability is attributed largely to a significant 128.7% increase in loan loss provisions with gross non-performing loans increasing sharply by 81.5% year-on-year.
- Net interest income grew by 21 per cent to KSh 104.2 billion up from KSh 86 billion in 2022
- Total costs grew by 52 per cent KSh 128.2 billion driven by a 139 per cent growth in loan loss provision to KSh 32.8 billion up from KSh 13.7 billion.
- Gross balance sheet grew by 26 per cent to KSh 1.821 trillion up from KSh 1.447 trillion driven by 29 per cent growth in customer deposits to KSh 1.358 trillion from KSh 1.052 trillion.
Equity Group traced the profit decline to interest expense growing at 53 per cent compared to 30 per cent growth rate of interest income. The group proposed KSh 15.1 billion dividend.
Other operating expenses and staff costs grew by 39 per cent and 28 per cent respectively driven by high inflation and depreciation of the Kenyan shilling.
Shareholder funds grew by 20 per cent to KSh 218.1 billion up from KSh 182.2 billion. Return on average equity stood at 22.3 per cent against an 18 per cent cost of capital.
“The Non-Performing Loans trend is consistent with management’s view as at the investors 3rd quarter briefing that NPLs had peaked. Prudent risk management culture led the board to approve a proactive derisking of future performance by providing for the lifetime expected loss on outstanding NPLs,” said James Mwangi, Group Chief Executive Officer.
Equity Group’s deposit distribution is: Kenya 50 per cent, DRC 32 per cent, Uganda 8 per cent, Rwanda 6 per cent while loan distribution is: Kenya 51 per cent, DRC 32 per cent, Uganda 8 per cent, Rwanda 6 per cent.
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