Equity Group Reports 14% Profit After Tax Growth to Kshs 22.6 Billion

EQUITY

Equity Group has today announced its financial results for the year ended 31 st December 2019. The group recorded a 14% profit after tax growth to Kshs 22.6 billion from Kshs 19.8 billion in 2018, driven by a 23% growth in loan book to Kshs 366.4 billion from Kshs 297.2 billion in 2018.

Growth in the loan book was contributed to by an increase in customer deposits of 14%, shareholders funds of 18% and a 26% growth of long-term borrowed funds. The group’s agile balance sheet reflected solid diversified funding with customer deposits constituting 72% of the total funding, shareholders and long-term borrowing contributing 17% and 8% respectively.

“Execution of the Group’s business strategy continued to yield results as non-funded income contributed 40% of the Group’s total income reflecting quality and diversification of income. Success in our regional expansion and business diversification saw subsidiaries contribution to Group profit after tax rise to 18% up from 15% the previous year,” said Dr James Mwangi, Managing Director and
CEO.

Net loans constituted 54% of the total assets while government securities and cash and cash equivalents contributed 26% and 13% of the total asset allocation respectively. Thanks to innovations and digitization the group has adopted a business model that continues to evolve from a fixed to a viable cost business model leveraging off variable cost 3 rd party infrastructure principally mobile, internet, agency and merchant banking, to enhance efficiency through cost optimization.

“Our purpose of transforming lives, giving dignity and expanding opportunities for wealth creation and our vision of championing social economic prosperity of the people of Africa is driving our business. Our purpose has become profitable,” he added.

In a challenging microeconomic operating environment, the Group increased loan loss provision by 51% to Kshs.4.4 billion up from
Kshs.2.9 billion in 2018 resulting in a cost of risk of 1.34% up from 1.02%. Net Non Performing Loans exposure improved from Kshs.2.87 billion to Kshs.1.14 billion. Through a partnership with Mastercard Foundation and the Kenya Government, the Group has rolled out “Young Africa Works” an initiative designed to create 5 million jobs for young people over 5 years through capacity building
and enterprise financing.

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