Equity Group has reported a net profit  of Ksh. 24.4 Billion for the half year 2022, this represents a 36% rise from the Ksh. 17.9 Billion for a similar period last year.

This rise in profitability was on the back of a 29.6% rise in the total Interest income to Ksh. 54 Billion which was brought about by a 74% rise in interest income from loans to Ksh. 35 Billion while income from government securities increased by 50% to Ksh. 19 Billion. While non interest income rose by 24% to Ksh. 25.8 Billion.

Operating costs on the other hand rose by 24% to Ksh. 34.7 Billion on the back of a 27% rise in the staff costs to Ksh. 10.8 Billion while the loan loss provision rose by 40% to stand at Ksh. 4 Billion.

During the period, a differentiated strategy adopted by the bank to support borrowers to cope with the difficulties of Covid-19 business disruptions has seen most of the businesses survive and recover. Out of Kshs 171.4 billion Covid-19 restructured loan book, Kshs 46.6 billion has been fully repaid, and a further Kshs 114.0 has resumed repayment, with only Kshs 8.1 billion non-performing. Out of the remaining Kshs 11 billion which is anticipated to resume repayment within the next six months, only Kshs 2.7 billion is showing strain of recovery.

The bank indicated that they have fully provided for the entire Kshs 8.1 billion Covid-19 book that has resumed repayment and is non-performing while proactively downgrading Kshs 2.7 billion of the remaining restructured book. The success of the recovery and resilience strategy is reflected by the decline in NPL ratios to 8.5% compared to 10.7% the previous year. The Group’s 8.5% NPL positively and favorably compares to Kenya’s banking industry NPL ratio of 14.7% as at 30th June 2022.

The geographical expansion and business diversification strategy has successfully reduced the concentration of sovereign risk on Kenya by having subsidiaries contribute 40% of the Groups Total Assets, 42% of the Group total revenue and 28% of the profit after tax. Expansion and diversification initiatives have affirmed the strategy as subsidiaries other than Kenya posted a return on average equity of 22.3% above the cost of capital of 21% and enabling the Kenyan mother business to register a 35.5% return on average equity and 4.2% return of average assets. The Kenya business also registered a 39.2% cost to income ratio as a result of declining unit cost on shared services on account of economies of scale.

The Group cost to income ratio has improved to 46.7% down from 48.5% and cost to asset ratio has improved to 4.7% down from 5.4% on a 19% expanded balance sheet of Kshs 1,333.9 billion up from Kshs 1,119.7 billion. Group return on average equity has increased to 28.9% up from 25% while Group return on average assets has risen to 3.8% up from 3.3%.

From the excellent lessons from the business recovery and resilience strategy that enabled the Group, and its customers adapt and mitigate the effects of the business disruption and emerge stronger and resilient, the Group has formulated an environmental strategy “The Africa Recovery and Resilience Plan”. To implement the Plan, the Group has partnered with anchor shareholders IFC, Arise, National governments, national UN representative offices, 14 development banks and the Global regional and national private sector champions to scale  and fast track economic recovery and resilience through private sector-driven expansion of opportunities in the real economy of manufacturing, value addition, increased output in trade and investment, increased SME formalisation and capacitation, promotion of use of technology, innovation and clean energy while conserving and protecting the environment.