Ratings Agency Moody’s has picked Equity Bank as among the few financial institutions that have strong liquidity buffers and adequate liquidity assets which will aid in easing asset quality pressure on the lender amid the pandemic.
Equity Group’s Q1, 2020 financials saw its net earnings dropped by 14% to KSh 5.3 Billion driven by an increase in the lender’s provisions for loan losses which shot up tenfold from KSh 300 Million in Q1, 2019 to KSh 3 Billion in Q1, 2020.
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.
Equity Group 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.
Fees and Commissions on loans to customers grew marginally from KSh 10.4 Billion to KSh 11.5 Billion. The Group’s balance sheet size increased from KSh 605.7 Billion to KSh 693.2 Billion in Q1, 2020.
Total shareholder wealth grew from KSh 95.4 Billion to KSh 116.4 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 of transactions conducted, 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.
The Group, which has subsidiaries in 5 other Eastern Africa countries and a representative office in Ethiopia, has rolled out various IT platforms including Eazzy FX, Equity’s new online forex trading platform that began trading in April 2019.
Covid Digital Ready Bank
COVID-19 has made it clear how important it is for financial service providers to strengthen their offering through digital platforms given the change in customer behaviours and expectations.
A recent report by PwC looks at the impact of the virus on retail banking environment and notes that when covid19 pandemic hit, everything changed overnight and less than 15% of the world’s banking institutions were digitally prepared.
Thanks to a massive investment in technology even before the pandemic, 97 per cent of all Equity Group’s transactions were already being conducted outside the branch.
With many people now doing things online and avoiding cash for both sanitary reasons as well as convenience, the bank has proven through its state-of-the-art technology that your smartphone has essentially become a bank in your hands. The Bank recently upgraded its EazzyBanking App to enhance customer experience.
In these times of uncertainty, it is essential that banking customers feel their money is accessible and taken care of. Some may feel the need to change banking relationships if there are not offerings that coincide with current restrictions.
ALSO READ; Equity Bank’s Digital Resilience in the Face of COVID-19
