Despite operating in an intrest capped regime, that has seen most banks in Kenya resort to government securities to grow wealth, an action that saw a significant drop in loan book, shrinking credit to the private sector, Equity Bank has managed to operate smoothly and achieve its financial targets.
Speaking during the bank’s quarter one 2019 report, Equity CEO James Mwangi noted that the return to organic growth (growth from the increassed output), attributed by the 13 per cent growth in loan book is an indicator that the bank’s money is in supply, creating value for the economy. Digital disruption played a key role in the growth of the bank’s loan book, recorded by a 93 per cent of total loans channelled through the mobile platform.
“We have learned to operate with interest capping as a new norm despite the associated challenge of risk pricing. I am happy that we have bounced back to organic growth after two years of depressed growth,’’ he said.
The bank’s net loans grew to Sh305.5 billion from Sh271.1 billion in the corresponding quarter last year, pushing up total assets by 15 per cent to Sh605.7 billion compared to Sh527.8 billion reported same period last year.
While Equity is looking to collaborate more with telco giant Safaricom to deepen financial inclusion in the economy, the lender is forecasting a convergence of its digital products, Eazzy pay and Safaricom’s M-Pesa into one (Business Operating System) BOS, easing the burden of carrying cash around without eliminating traditional credit cards.
With 75 per cent of Equity Bank loans being in Kenyan money and Small to Medium Business controlling 60% of its loan book, especially Micro SMEs, Personal businesses and agriculture, with technology integrated platform, the SMEs can lay their hands-on quantifiable finances to propel growth in their ventures.
In its partnership, Equity is targeting sectors flooded with SMEs including, Transport, Trade, Building and Construction, with value chains in manufacturing and personal enterprises expected to grow exponentially through the financial inclusion. The fact that Equity Bank has penetrated remote areas with over 280 rural branches, rolling off the project should hit the ground running.