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Equity Group has registered 14% Profit after Tax growth to Kshs 22.6 billion from Kshs 19.8 billion in 2018 for the year ended 31st December 2019.
The lender said the growth was driven by a 23% growth in loan book to Kshs 366.4 billion from Kshs 297.2 billion in 2018.
The growth in loan book, saw the Group balance sheet register a 17% growth to reach Kshs. 673.7 billion up from Kshs 573.4 billion funded by growth in customer deposits of 14%, shareholders funds of 18% and a 26% growth of long-term borrowed funds.
Dr. James Mwangi, Managing Director, and CEO said, “Execution of the Group’s business strategy continued to yield results as non-funded income contributed 40% of the Group’s total income reflecting quality and diversification of income.
Success in our regional expansion and business diversification saw subsidiaries contribution to Group profit after tax rise to 18% up from 15% the previous year.”
Return on average equity (RoAE) from subsidiaries grew to 16.9% up from 13.3%.
Subsidiaries’ assets accounted for 27% of the Group’s total assets while their profit after tax contribution grew to 18% of Group’s profits up from 14% in 2018.
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Improved efficiencies at the subsidiaries saw their cost structure contribute to the Group improve to 35% from 37% in 2018.
The Group registered enhanced efficiency and cost optimization with cost-income ratio improving to 51% from 52.4% in 2018.
The Group maintained its yield on interest-earning assets at 11.2% despite the challenge of interest capping and the declining yield curve.
During the year the Group maintained a healthy mix of asset classes across the market segments with 59% being SMEs, 22% consumers, 13% large enterprises and 3% each for micro and agriculture.
The risk profile remained diversified with a currency mix of 64% for local currency and 36% of foreign currency assets.
The asset quality came under pressure, but the Group achieved a non-performing loan ratio of 9% against an industry average of 12.1%.
In recognition of pressure on the asset quality and a challenging microeconomic operating environment, the Group increased loan loss provision by 51% to Ksh 4.4 billion up from Ksh 2.9 billion in 2018 resulting in a cost of risk of 1.34% up from 1.02%. Net NPLs exposure improved from Kshs.2.87 billion to Ksh 1.14 billion.
Return on average assets (RoAA) remained at 3.6% while Return on average equity (RoAE) improved to 21.8% up from 21.1% against a Group cost of capital of 18.7%.
With a 14% growth in earnings per share of Ksh5.93 up from Kshs 5.22, the Board of Directors have proposed a 25% enhanced dividend payout of Kshs.2.50 up from Ksh2.00 per share.
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