Equity Group is on Track to Reach KSH 1 Trillion Market Value

Equity Group HY Results: Profit Tanks 24% to Ksh 9.1 billion

Dr. James Mwangi Group Managing Director & CEO Equity Group Holdings Plc

Equity Group Holdings Plc (NSE: EQTY)  says it is on track to achieve a Ksh 1 trillion market value

Equity Group Managing Director and CEO Dr. James Mwangi on Tuesday, during the lenders’ 16 Annual General Meeting told the shareholders that their focus is ‘deepening their foothold’  from a horizontal to a vertical model. 

In Kenya, the lender’s market share increased from 11 to 13 percent.

“We are excited by the Democratic Republic of Congo. We are at the tail end of completing the BCDC transaction in DRC. This will make us the largest bank in DRC in 18-24 months and help in the penetration of financial services currently at 10 percent.”

“We are slightly Ksh 800 billion. When the transaction is concluded, we shall be Ksh 200 billion shy to hit our trillion mark,” he said.

In 2019, the Group Profit Before Tax (PBT) increased by 11 percent to KShs 31.5 Billion. Return on Equity (ROE) was 22 percent with Uganda and Rwanda posting ROE above cost of capital, an indication that the regional expansion strategy is beginning to pay off.

“We also achieved rapid growth in Rwanda and DRC with 12 percent and 38 percent increase in assets respectively,” said Dr James Mwangi. “Regional banking subsidiaries and local non-banking
subsidiaries accounted for 28% of overall Group revenues and continues to drive initiatives to increase
their overall contribution. Increasingly, we are seeing evidence that the Group is becoming a systemic
financial services provider in the region.”

In the coming weeks, EGH will be paying a final Kshs 2.1 billion for the acquisition of a 66.5 percent controlling stake in Banque Commerciale du Congo (BCDC).

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The amount will be kept in an escrow account with part of the funds being released to the George Arthur Forest family, a year after the completion date of the deal, provided Equity does not encounter new liabilities in BCDC, while the remaining balance will be released after 2 years. 

Last week, in a circular to its shareholders, Equity Group also disclosed the agreement provides for a claims mechanism that enables the Group to seek compensation in certain circumstances post-completion.  

“In our view, the approach by Equity Group will ensure its investors are able to get value from the acquisition and ensure Equity’s expansion into DRC continues to contribute positively to the Group,” Cytonn Investments comments.

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