Equity Group Holdings 9-month pre-tax profit up 11 per cent

Equity Group Holding Chief Executive Officer James Mwangi
Equity Group Holdings said on Tuesday its nine-month pretax profit rose 11 per cent to Sh24.78 billion, helped by a surge in lending, higher interest and non-funded income in its main market Kenya.

Net interest income in the nine months came in at Sh32.29 billion, compared with Sh29.5 billion a year ago, while non-funded income rose to Sh22.54 billion from Sh19.8 billion last year, Chief Executive James Mwangi said at an investor briefing.

The bank, which also operates in Tanzania, Rwanda, Burundi, South Sudan, Uganda and Democratic Republic of Congo, posted a pretax profit of Sh22.41 billion last year, up 8 per cent from Sh20.7 billion in the first nine months of 2017.

Equity is the first bank to report its results after Kenya lifted a cap on lending rates. The central bank and the finance ministry said the rate cap had stifled credit, especially for small businesses, and reduced the effectiveness of a monetary policy.

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Banking business in Kenya provides the bulk of profit for Equity, but subsidiaries in east and central Africa have contributed significantly to its growth over the last two years, as the sector dealt with a government cap on commercial rates in its home market.

“The last three years gave us an opportunity to reinvent ourselves. We saw the interest rate cap as a new normal. The interest rate cap removal can only be a bonus,” Mwangi said.

Earlier this year, Equity said it was in talks with some of Banqué Commerciale du Congo’s (BCDC) shareholders to buy a controlling stake for cash, stepping up its expansion plans in Africa.

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Equity already has a subsidiary in DR Congo, which is one of the biggest countries on the continent by land mass and has more than 80 million people, making it appealing to ambitious lenders in regional states looking for growth.

The bank said its total assets rose to Sh677.1 billion from Sh560.4 billion in same period in 2018, while loans and advances to customers grew 21 per cent to Sh348.9 billion in the same period last year.

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Equity GroupJames Mwangi