Equity Bank posts 7.2 per cent growth in net income

Equity Bank Group CEO James Mwangi during the bank's Q3 results briefing at Equity Center in Nairobi on November 4, 2013. Group profit after tax grew by 7.2 per cent. Photo/DIANA NGILA  NATION MEDID GROUP

By David Herbling

In Summary

• Equity Bank’s net profit grew 7.27 per cent in the first nine months of the year, aided by cheap deposits and increased lending
• The bank, which is East Africa’s largest in terms of the number of deposit accounts, on Monday said its profit after tax rose to Sh8.9 billion for the period ended September 2013 from Sh8.3 billion for the period ended September 2012

Equity Bank’s net profit grew 7.27 per cent in the first nine months of the year, aided by cheap deposits and increased lending.

The bank, which is East Africa’s largest in terms of the number of deposit accounts, on Monday said its profit after tax rose to Sh8.9 billion for the period ended September 2013 from Sh8.3 billion for the period ended September 2012.

The lender’s net interest income increased 14.39 per cent or Sh2.47 billion to Sh19.71 billion as at September this year from Sh17.23 billion as at September 2012.

Equity’s deposit costs dropped to Sh3.84 billion from Sh5.43 billion, translating to savings of Sh1.58 billion that is higher than the additional profit of Sh603.58 million the group posted.

Its loan book grew by Sh27.24 billion to top Sh158.57 billion following a drop in lending rates after CBK cut the signal rate to 8.5 per cent in May.

“The growth is attributed to growth in agency banking which has now surpassed ATMs in volume of business,” said James Mwangi, chief executive of Equity Bank.

Mr Mwangi attributed the slowdown in profit growth to Sh2 billion invested in upgrading the lender’s core banking system, training staff on use of the new platform and integrating its IT system to be global payments processor and gateway.

“We’re creating infrastructure to position ourselves to reap from merchant businesses, diaspora remittances, transaction processing and connecting to all global payment systems,” said Mr Mwangi.

“This will create huge opportunities for us next year as we leverage on technology.”

Equity now trails KCB Group which posted Sh10.4 billion in net profits in the first nine months of this year, making it the region’s most profitable lender.

Joshua Oigara, KCB Group chief executive officer on Thursday last week said the bank’s profit after tax rose 15.43 per cent from Sh9.37 billion in the first nine months of last year.

Equity, which has regional operations in Uganda, Tanzania, Rwanda and South Sudan; said its subsidiaries contributed 14 per cent of total revenues and raked in Sh581 million in profits in the three quarters to September.

Its volume of bad loans almost doubled in the third quarter, rising to Sh7.5 billion from Sh2.92 billion.

Equity Bank’s stock was quoted at Sh34.75 on Monday 0900 GMT; a drop of Sh1.00 compared to Friday’s average closing price at the Nairobi bourse.