Equity Bank net profit up 18pc on high returns from govt securities

An Equity Bank branch in Nairobi. The lender has posted an 18 per cent increase in net profit for the nine months to September. PHOTO | FILE   

By CHARLES MWANIKI

In Summary

• Equity is the first listed lender to release third quarter results, with its big shift towards government securities likely to be the trend in the industry.
• Equity doubled its loan loss provision during the period
• The gross non-performing loans at the bank rose by 40 per cent equivalent to six per cent of the loan book.

Equity Bank has posted an 18 per cent increase in net profit for the nine months to September, riding on higher returns from government securities.

The bank’s investment in government securities increased by 156 per cent, in turn pushing up interest income by 26 per cent.

The bank loan book expanded by three per cent in the period, while its deposit base increased by 4.8 per cent.
Banks were expected to increase their investments in government securities following the signing of the interest rate cap law, which limits the rates on customer loans to four percentage points above the prevailing Central Bank Rate.

Big shift
Equity is the first listed lender to release third quarter results, with its big shift towards government securities likely to be the trend in the industry.
Non-interest income however contracted by 1.2 per cent on lower income from loan fees and commissions, which dropped between September 2015 and September 2016.
Equity doubled its loan loss provision during the period. The gross non-performing loans at the bank rose by 40 per cent, which is equivalent to six per cent of the loan book.