Equity Group has reported a net profit Kshs.12.8 Billion for Q1 2023 which is an 8% rise up from Kshs.11.9 billion reported in a similar period last year.

The rise in profitability was driven by non funded income of Kshs.18 billion up 57% from Kshs.11.5 billion, which contributed 45% of total income reflecting the improving quality of Group earnings. Total income grew by 28% to Kshs.39.7 billion up from Kshs.30.9 billion as a result of slow growth in interest income of 21% to Kshs.32.4 billion up from Kshs.26.7 billion, while the corresponding interest expenses grew by more than double the rate of interest income growth at 47% to Kshs.10.7 billion up from Kshs.7.3 billion. Yields on interest earning assets increased to 10.3% up from 9.5% but net interest margin stagnated at 6.8% as a result of increase in cost of funds which grew to 3.5% up from 2.7%. The increase reflects the challenging macroeconomic operating environment characterized by stubborn high inflation and high interest rates.

On the other hand, total costs grew by 46% to Kshs.22.8 billion up from Kshs. 15.6 billion. The costs were primarily driven by 127% growth in loan loss provision of Kshs.3.1 billion up from Kshs.1.4 billion, staff cost growth of 33% to Kshs.6.6 billion up from Kshs. 5.0 billion and other operating expenses growth of 42% to Kshs.13.1 billion up from Kshs. 9.2 billion.

The increase in loan loss provision of 127% to Kshs. 3.1 billion up from Kshs.1.4 billion raised the cost of risk to 1.9% up from 1.2% and was caused by a slight deterioration in NPLs to 9.1% up from 8.65%.

The Group registered a 21% growth with total assets reaching Kshs.1,537.7 billion. Funding the asset growth is a 23% growth in customer deposits with the proceeds deployed to grow loan the book by 21%. Customer deposits grew to Kshs.1,111.2 billion up from Kshs.900.9 billion while the loan book grew to Kshs.756.3 billion up from Kshs.623.6 billion.

During the period, fintech/digital capabilities of the Group continued to be strengthened by the successful rollout of the interoperable universal digital payments platform, Pay with Equity (PwE), whose transactions volume grew by 243% to 48.3 million transactions up from 14.1 million transactions. Mobile and internet banking transactions grew by 270% to 1,336.3 million transactions up from 361.6 million transactions. Transaction income grew by 73% to Kshs.4,119.6 million up from Kshs.2,388 million.

Dr. James Mwangi, Equity Group Managing Director and CEO said, “The strong growth speaks to the Group’s embedded social and trust capital that has seen the Group’s brand rated the 4th strongest financial brand on Earth. We are working to anchor the strength of the brand on customer experience, its capabilities and superior product offering.