Equity Group is banking on its Ugandan subsidiary to shore up its revenue

Equity Group is banking on its Ugandan subsidiary to shore up its revenue in the face of a shrinking loan book in its Kenyan business.

Of the six subsidiaries, Kenya and South Sudan were the only ones that recorded negative loan book growth, with Uganda registering the fastest growth even though its loan book is about 17 times smaller than that of Kenya.

Chief Executive James Mwangi said the Ugandan subsidiary was becoming more promising, especially after posting a 43 per cent loan book growth to Sh12.3 billion compared to Sh8.6 billion in a similar period last year.

Customer deposits in Uganda also grew by 42 per cent, the second fastest to that of Rwanda, which grew at 45 per cent.

In results released on Monday, the group posted a 3.3 per cent decline in net profit to Sh14.6 billion in the nine-month period of trading ended September 30, 2017, on the back of a challenging macro-environment.

Mr Mwangi said the performance was impacted by temporary headwinds from a protracted election period, drought, and interest rate cap, which slowed the flow of money in the economy.

“There’s a price for everything. Our income has remained flat because we lost about 42 per cent of our interest income on loans. If loans had remained the same, we would be talking of Sh30 billion in gross profit,” said Mwangi at a press briefing in Nairobi.

In the Kenyan subsidiary, net loans and advances to customers shrank for the sixth consecutive quarter since touching a high of Sh229.5 billion in March 2016.

In the nine months to September this year, the Kenyan business’s loan book stood at Sh206.2 billion, being Sh14.9 billion or 6.7 per cent lower than it was in the same period last year.