How Equity Bank’s Strategy Grew its Non-funded Income Portfolio

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Equity Group Managing Director and CEO Dr. James Mwangi giving his address during the release of Q3 results at Equity Centre, Upper hill, Nairobi.

Equity bank grew its non-funded income portfolio which contributed 41% of the lender’s earnings accredited to a deliberate strategy by the bank to achieve an income mix.

The non-funded revenue stream in Q3 2019, grew to Kshs 22.5 billion, registering a 14% increase from Kshs 19.8 billion during the same period last year. 

Speaking at the investor briefing during the release of the Quarter 3 results, Dr. James Mwangi, Group Chief Executive Officer acknowledged the bank’s efforts on growing its non-funded income, stating that it signified a tremendous transfer of value to the customers.

“At 41% against an industry average of 37%, it is a reflection that the bank is fully committed to enhancing the quality of earnings and with the payments systems we aim at growing this income to above 50%,” says Dr. Mwangi, chief executive Equity.

This growth was further aided by Equity bank’s commitment to digitization and innovation which saw a massive upsurge in the volume of transactions through the digital channels. Mobile banking still carries the day with 432 million transactions signaling a growth of 18% from 366 million transactions during a similar period last year.

The Equitel platform managed over 198 million transactions during the quarter, which translated to Kshs 459 billion in value transacted. The EazzyApp platform was equally impressive registering over 231 million transactions which equated to Kshs 124 billion worth of in the quarter.

“This signals a consolidation of banking all the way to the customer level, and as evidenced by the performance, our customers appreciate the convenience of the self-service platforms,” adds Dr. Mwangi.

He lauded the continued entrenchment of the payments service apps which have altered the cost structure of the bank from fixed costs to variable costs with minimal investments attributed to the use of 3rd party infrastructure.  

 “The bank registered a 21% growth in its loan book, simultaneously recording 19% growth in deposits from a similar period last year, meaning we managed to maintain a state of equilibrium. The growth in deposits is a reflection of our market share which speaks of consolidation at the customer level,” says Dr. Mwangi.

Transactions outside the bank accounted for 97% of total transactions with mobile money accounting for 77%. Similarly, 93% of total transactions count were transacted through its mobile money platform.

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