Equity Group has reported a Ksh. 46.1 billion net profit for the year ended December 2022, this is a 15 percent rise in profitability from Sh40.07 billion which was reported in a similar period last year.
The rise in profitability was on the back of a 28% growth in total income of KES 144.3B, made up of KES 58.3B of non-funded income which grew by 33% and net interest income of KES 86.0B which grew by 25%. A 73% growth in gross trade finance revenue underpinned by a 37% growth in trade finance guarantees and off-balance sheet items drove the growth of non-funded income.
On the other hand, Total cost grew by 39% to hit Ksh. 84.5Billion as a result of 180% growth in the loan loss provision to KES 13.7B up from KES 4.9B to achieve 94% NPL coverage
at a 2.4% cost of risk and staff cost growth of 30% to KES 24.8B, up from KES19.1B as the Group hired to strengthen and deepen its executive leadership and management bench while strengthening talent and fortifying organizational governance structure as a platform for takeoff.
The bank’s Kenyan unit contributed to 70% or KES 33.4 billion of the Profit After Tax, leaving the other subsidiaries to contribute KES14.7 billion of net profit. The time it takes for a subsidiary to reach a 4% Return on Assets has reduced from 16 years to 12 years and may reduce further as the region consolidates as the fastest growing region in the world.
Dr. James Mwangi, Group Managing Director and CEO had this to say, “The Group’s 2022 results reflect the resilience that the business has developed due to deliberate and intentional leadership and management decisions through interest capping period and COVID- 19 pandemic environment, strategically positioning the business to navigate the evolving macroeconomic headwinds and turbulence in the financial and economic sectors. While the Group’s offensive strategy has helped double the size of the balance sheet and increase its market share by 60% over the last 3 years of COVID-19 environment, the defensive aspects of the strategy have strongly positioned the Group to wither the prevailing challenging macroeconomic environment resulting from the evolution of COVID- 19 health pandemic into an economic crisis resulting from disruption of global supply chains and the current macroeconomic headwinds of a stubborn, and sticky inflation, elevated interest rates and turbulence of exchange rates and currency devaluations which have combined to a global perfect financial storm.”
The lender has declared a dividend of Sh4 per share, a 33 percent rise from the Sh3 that was paid last year. The dividend payout will amount to Sh15.1 billion an equivalent of 33 percent of net earnings—in line with its dividend policy of distributing between 30 percent and 50 percent of its net profit to shareholders.