During the first three months of 2020, Equity Group saw its net earnings drop by 14% to KSh 5.43 Billion against a similar reporting period last year when the lender recorded a net profit of KSh 6.19 Billion.
The bank’s gross earnings in the first quarter of 2020 also fell to KSh 7 Billion from KSh 8.8 Billion over a similar period in 2019. This slide-in performance of Equity Group provides a bird’s eye view of the financial strain lenders are undergoing as customers experience difficulties in meeting the loan repayment obligations.
Latest data from Central Bank of Kenya (CBK) shows that commercial banks have had to restructure repayments of personal loans worth more than KSh 102.5 Billion, severely hitting interest income on loans to customers.
The unaudited financial statements for the period ended 31st March, 2020 shows that the size of Gross Non-performing loans grew from KSh 29.3 Billion in the first quarter of 2019 to KSh 44.6 Billion in the first three months of 2020.
Equity Group made huge provisions for loan losses which shot up sevenfold from KSh 409.9 Million in Q1, 2019 to KSh 3.1 Billion in Q1, 2020. Fees and Commissions on loans to customers grew marginally from KSh 9.1 Billion to KSh 10.8 Billion.
The Group’s balance sheet size increased from KSh 605.7 Billion to KSh 693.2 Billion in Q1, 2020. The total wealth of the lender’s owners grew from KSh 510.2 Billion to KSh 576.8 Billion during the period under review.
Data from Equity Group shows that it now executes 97% of all transactions outside its physical branches. The largest bulk of these transactions( 79%) are done on mobile and internet banking platforms followed by agency banking (11%), Branch (3%), ATMs (3%) and others (4%).
In terms of value, branches lead with 47% of the transactions followed by mobile and internet banking (27%), Agency (17%), ATMs (5%) and others(4%). 53% of the Group’s value is still moved outside the brick and mortar branches.
Equity has already informed its shareholders of its decision to withhold payment of dividends. It says this is to enable it to build enough capital and liquidity to deal with the unforeseen challenges posed by the COVID-19 pandemic.
Other lenders who have withdrawn payment of cash dividends to shareholders include NCBA and UK-based StanChart Kenya Limited. Others such as Stanbic Bank is offering a safer landing for their shareholders by converting the cash payouts into bonus share issues.
On the other hand Absa Bank Kenya has maintained its recommendation for the payment of a final dividend of Ksh 0.90 for the full year 2019 to shareholders on the register by June 03, 2020. The bank will also hold its virtual AGM on June 19, 2020.