Equity grows loan book by 30% to support customers and keep economy lights on
By Reporter
While releasing the results for Q3 2020, Dr. James Mwangi, Group Managing Director and CEO said, “We grew our loan book by 30% year on year in order to support our customers who saw opportunities of green shoots and diversification in the COVID-19 environment. Most of the new opportunities we funded were in manufacturing of PPE’s, logistics, online businesses, agro- processing, fast moving consumer goods and agriculture value chains.”
Execution of Equity Group’s twin strategy of being defensive and offensive has proven to be effective despite the challenging environment. Customer deposits registered a 45% growth from Kshs478 billion to Kshs 691 billion driven by 51% growth in Uganda, 21% growth in Kenya and an additional Kshs130 billion from the acquisition of BCDC in DRC. Loans to customers grew by 30% driven by 37% growth in Uganda, 19% growth by Equity Bank Congo, 15% growth in Rwanda, 15% growth in Kenya and an additional Kshs 48.5 billion from the acquisition of BCDC in DRC. The growth in capital weighted loan book and capital geared customer deposits was on the back of a 27% growth in shareholders’ funds following withdrawal of Equity Group Holdings’ 2019 dividend payout. The balance sheet of the Group grew by 38% from Kshs 677.1 billion to reach Kshs 934 billion.
Regional expansion and business diversification efforts have reduced dependence on Kenya for Group performance making the Group truly a regional financial services provider. Regional subsidiaries now contribute 40% of customer deposits, 39% of Group total assets, 33% of the loan book, 30% of the Group’s revenue and 25% of the Group’s profit before tax.
On the defensive strategy the Group increased its capital base by 27% to Kshs 137.6 billion from Kshs 108.7 billion to fortify the balance sheet. The Group’s liquidity position strengthened to 55.7% driven by a 61% growth in cash and cash equivalents and a 34% growth in Government securities. Maintaining its conservative and prudent approach and in recognition of the challenging operating environment, the Group increased its loan book provision eleven-fold from Kshs1.3 billion to Kshs14.3 billion compared to the same period last year, registering a cost of risk of 4.8% up from 0.8% the corresponding period last year. To further consolidate liquidity, the Group increased its long-term funding by 7% to Kshs 70.7 billion from Kshs 66.3 billion as shareholders funding grew by 27%.
