Equity Group Holdings reported a 5.3% increase in its profit after tax (PAT) for the third quarter of 2023, reaching KES 36.2 billion.
The growth was attributed to a 21.3% rise in net interest income, which reached KES 72.6 billion, as well as a 19.9% increase in customer deposits, which amounted to KES 1.2 trillion.
“We are aware of the macroeconomic challenges, the significant rise of interest rates as a result of higher inflation in the earlier part of the year, and the significant depreciation of the local currencies against the US Dollar. While the risks have concentrated in Kenya, we have seen the offset from the other subsidiaries. We have seen a strong benefit coming from geographic diversification as the other subsidiaries in the other countries offset the stress in Kenya,” Equity Group Chief Risk Officer, Sam Gitwekere.
The group’s assets grew by 24.0% year-on-year, reaching KES 1.7 trillion, while its loan book expanded by 25.5%, reaching KES 845.9 billion.
The group’s loan-to-deposit ratio improved from 66.4% in Q3 2022 to 68.8% in Q3 2023, indicating a higher efficiency in lending.
However, the group also faced some challenges, such as a surge in gross non-performing loans (NPLs), which rose by 83.5% to KES 124.5 billion, representing 14.7% of the total loan book.
The group increased its provisions for bad debts by 96.6% to KES 18.9 billion, reflecting a cautious approach to managing credit risk. The group’s earnings per share (EPS) grew by 3.7% to KES 9.17, slightly lower than the PAT growth rate.
| Balance Sheet Items (Kshs bn) | Q3’2022 | Q3’2023 | y/y change |
| Government Securities | 233.0 | 242.5 | 4.1% |
| Net Loans and Advances | 673.9 | 845.9 | 25.5% |
| Total Assets | 1363.7 | 1691.2 | 24.0% |
| Customer Deposits | 1007.3 | 1207.7 | 19.9% |
| Deposits per branch | 3.0 | 3.4 | 14.1% |
| Total Liabilities | 1209.7 | 1497.9 | 23.8% |
| Shareholder’s Funds | 147.5 | 183.9 | 24.7% |
| Income Statement (Kshs bn) | Q3’2022 | Q3’2023 | y/y change |
| Net Interest Income | 59.8 | 72.6 | 21.3% |
| Net non-Interest Income | 42.2 | 57.8 | 36.9% |
| Total Operating income | 102.1 | 130.4 | 27.8% |
| Loan Loss Provision | (9.7) | (19.0) | 96.6% |
| Total Operating expenses | (57.7) | (84.5) | 46.3% |
| Profit before tax | 44.3 | 45.9 | 3.6% |
| Profit after tax | 34.4 | 36.2 | 5.3% |
| Core EPS (Kshs) | 9.1 | 9.6 | 5.3% |
The group’s CEO, Dr James Mwangi, attributed the performance to the group’s resilience, innovation, and diversification, as well as its strong regional presence and digital transformation.
“If you look at the countries we operate in, the country that has had the biggest impact of the global macro shock is Kenya. It is the country whose currency has had the highest depreciation. That has carried the biggest impact as it has translated to imported inflation at a time the country had to import food, energy. While that required a lot of dollars, it is when the US and the developed world increased rates and they became more attractive than emerging markets. While we needed US dollars for imports, there were massive outflows and that made the situation in Kenya challenging,” Equity Group Chief Executive Officer, Dr. James Mwangi.
“Despite the current economic turbulence, the group has maintained and preserved its balance sheet in an exceptionally agile state, demonstrating a high degree of flexibility to seize opportunities and promptly respond to shifts in the macro environment.”
