Equity half year net profit up 36pc to Sh24.4 billion – VIDEO – Business Daily
Equity Group has posted a 36 percent jump in net profits to Sh24.4 billion in the first half of this year on increased lending and strong performance of non-funded income.
The lender’s profits jumped from Sh17.9 billion in a similar period last year boosted by a 28 percent growth in income from lending to the government and customers.
Interest income increased by Sh12.2 billion to Sh54. 9 billion on strong returns from loans to the government and private sector. The bank also saw a 24.6 percent jump in non-funded income to Sh25.8 billion.
Equity Group CEO James Mwangi said the growth in income has been boosted by trade missions to the Democratic Republic of Congo that has pushed up trade finance and forex trading from cross-border deals.
“About 39 percent of our total income is non-funded income which is not consuming capital supporting what is coming from the loan book and fixed income,” Mr Mwangi said.
The lender has also seen a recovery in businesses supported during the Covid-19 pandemic that has seen nearly a third- Sh46.6 billion of the Sh171.4 billion pandemic support fully repaid.
A further Sh114 billion portfolio given moratoriums in 2020 has resumed repayment, with only Sh8.1 billion non-performing with Sh2.7 billion in default.
“The loan growth was targeted to supporting our clients to recover and rebuild after the Covid-19 business disruptions while allowing re-purposing and retooling for resilience and agility to take advantage of emerging opportunities and green shoots in the real economy,” Mr Mwangi said.
Recovery of Covid-19 loans saw the lender cut gross non-performing loans from 62.1 billion to Sh61 billion.
The lender has however had to increase loan loss provisions from Sh2.9 billion to Sh4 billion to increase coverage in case of a default.
Equity Bank says they have managed loan portfolios through diversification in different markets and through credit risk guarantees from development finance institutions.
The guarantees cover Equity Bank exposures to small businesses for 40 to 60 percent allowing the bank to expand its loan book aggressively.
Equity Bank’s loan book jumped 29 percent to Sh650.6 billion up from Sh504.8 billion.
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