Equity profits hit Sh12.2b as customers take up more loans
By Moses Michira | October 27th 2015
Equity Bank has posted a 14 per cent rise in after-tax profits for the nine months to September, with the lender’s boss dispelling fears the current high interest rates would slow down profitability in the full year.
Net profits rose to Sh12.2 billion on account of double-digit growth in loans advanced to customers, and a sharp increase in fees and commissions.
Managing Director James Mwangi told an investor briefing Monday that regional subsidiaries had also posted strong growth in the period to support the Kenyan operation, which is still the largest.
“We are confident of sustaining this trend and are optimistic of achieving a 50:50 per cent contribution between interest income and other income as the growth of the latter is underpinned and driven by the success of the SME strategy that now constitutes 70.6 per cent of the loan book,” said Dr Mwangi.
The recently-acquired subsidiary in the Democratic Republic of Congo was, for the first time, consolidated in the results released yesterday. Mwangi projects that his bank would have recouped the cost of its newest acquisition, Pro-Credit, within two years.
“We are looking at having it as the largest and most profitable lender in that country,” he said, referring to the acquisition that was completed two months ago.
Equity becomes the first bank to release it third-quarter operating results in the banking sector, which is now at the centre of focus in an economy where interest rates have shot up following a tightening monetary policy stance.
Mwangi projects that lending rates, which are at about 25 per cent, could start coming down from around March next year,
Volatility in the foreign exchange market became a boon for Equity, with earnings from the segment rising by 64 per cent.
Merchant banking commissions grew by 59 per cent, while revenues from insurance, custodial and brokerage fees almost doubled, helping non-funded income make up 40 per cent of total revenues.
The bank earned Sh16.8 billion from fees and commissions, including earnings from its 22,000 agents.
The uptake of Equitel, the lender’s mobile phone-based money transfer platform, rose two-and-half times over the last 10 months, with the service getting 1.3 million users.
Tanzania was the star performer among the subsidiaries on growth in credit that more than doubled from the nine months to September last year.
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