Equity Bank’s half-year net profit increases to Sh6bn

 

PHOTO | SALATON NJAU Equity Bank Group CEO Dr James Mwangi during the Bank’s half-year results briefing at Equity Centre in Nairobi on July 29, 2013. The bank’s net profit increased by 16 per cent.  NATION MEDIA GROUP

By JOSHUA MASINDE

In Summary

• Company’s income rose by 16 per cent from the Sh5.4 billion it realised in the same period last year, boosted by Kenyan outfit

Equity Bank Group’s net profit for the six months to June rose by 16 per cent despite a slowdown in the performance of its regional subsidiaries.

The bank reported a profit of Sh6.3 billion for the half-year period, up from the Sh5.4 billion realised in the same period last year, boosted by impressive growth in the Kenyan outfit.

Addressing investors in Nairobi on Monday, chief executive officer James Mwangi attributed the growth to a decline in interest expenses which dropped 31.7 per cent to Sh1.7 billion while net interest income went up by about 17 per cent to Sh13.3 billion year on year.

Performance from the regional subsidiaries, however, declined to 8 per cent of total earnings compared to 12 per cent in the first quarter.

This has been attributed to the disruption of oil flow in South Sudan in the last one and a half years and the suspension of donor aid to Uganda and Rwanda on allegations of mismanagement and corruption.

“Slow growth in regional operations was impacted by uncertainty in South Sudan as a result of termination of oil exportation and the suspension of donor budgetary to Uganda and Rwanda,” Mr Mwangi said.

With more than 8 million accounts, the bank has operations in Uganda, Tanzania, South Sudan and Rwanda.

The Kenyan operations recorded a 21 per cent growth in the period under review, further putting into focus the bank’s strategy in the regional markets where its model of targeting the low income segment of the market seemed not to have worked the way it has in Kenya.

A Citi research released in October last year said the bank has had a poor track record in its East African operations where it had injected Sh7.9 billion in investments since 2008 but is yet to realise significant returns.

No significant gains

Uganda got Sh4.9 billion, about 62 per cent of the total investment, but no significant gains have been realised from the subsidiary.

Last year, the contribution from the bank’s regional subsidiaries stood at about 17 per cent. 

Going forward, Mr Mwangi said the bank will focus on long term growth through deepening its agency banking model, continued partnership with global payments companies to enhance electronic payments and emphasis on banking the small and medium enterprises.

Currently, the bank has 7,632 agents compared to the 875 it had in 2011. It has also partnered with different electronic cards payment providers including MasterCard, PayPal, Visa, American Express, UnionPay and technology firm, Google to enhance use of cards in purchasing goods and services.

“The bank is well positioned through strategic partnerships to take advantage of the significant volume of mobile and merchant payments,” Mr Mwangi noted.