By Gitahi Ngunyi
Equity Group first quarter 2019 net profit jumped 5 percent as the bank resumed aggressive expansion of its loan book following temporary suspension of interest rate capping law by the high during the quarter.
In results released today, the group’s after tax profit grew to Sh6.2 billion from Sh5.9 billion the same period last year.
After two years of depressed growth in traditional banking business, Equity Group has bounced back to organic growth registering a year on year 13 percent growth in loan book.
“We have learned to operate with interest capping as a new norm despite the associated challenge of risk pricing”, said Dr. James Mwangi, Managing Director and CEO, Equity Group Holdings Plc while releasing the 1st quarter results.
The Group registered a 15 percent growth in total assets to reach Sh605.7 billion driven by growth of 12 percent on customer deposits.
“Intermediation engine has bounced back with growth in deposits intermediated to loans,” said Dr. Mwangi.
Interest income grew by 7 percent while non funded income registered a 7 percent growth rate.
Profit before tax grew by 6 percent to Sh8.8 billion up from Sh8.3 billion the previous year. The 7 percent growth on interest income was on the strength of 13 percent growth in the loan book, overcompensating the reduction in lending rate from 14 percent to 13 percent.
Non-funded income contribution to total income bounced back to 41 percent up from 38 percent recorded the previous year. Non-funded income growth reflected increased transactional activities and uptake of various fees and commission services, including merchant banking commission which grew by 15 percent driven by increased market share to 42 percent of visa acquiring business up from 38 percent. Forex trading income grew by 22 percent supported by increased dollar flow from Diaspora remittances that grew by 27 percent to reach Sh30.9 billion.