Equity group has registered a 51 percent growth in its balance sheet with its total assets growing to Ksh 1.015 billion (One trillion and fifteen billion shillings) up from Kshs 674 billion the previous year.
The group has remained resilient amid uncertainties brought about by Covid-19 pandemic that has shaken markets globally to record Ksh 20.1 billion profit after tax, a decline of 11 percent year over year.
The growth, according to Equity group was achieved through both organic and merger & acquisition strategies saw the group become the first financial institution to cross the trillion shillings Rubicon in East and Central Africa.
Announcing the 2020 financial year results, Equity Group managing director and CEO Dr. James Mwangi said the growth has been driven by a 53 percent increase in customer deposits which grew to Kshs 741 billion up from Kshs 483 billion.
While long-term debt financing grew by 71 percent to Kshs 97 billion from Kshs 57 billion with shareholders’ funds growing by 24 percent to Kshs 139 billion up from Kshs 112 billion.
Dr Mwangi noted that the group’s corporate purpose of ’Transforming lives, giving dignity and expanding opportunities for wealth creation’ became the guiding compass of the organization’s essence on how to navigate through the crisis and the challenging environment.
“Our results and performance became a human story of resilience and determination to live an ethical human purpose,” said Dr Mwangi, while releasing the results.
The Equity group noted that deployment of the 51 percent growth of funding enabled loans to customers grow by 30 percent to Kshs 478 billion up from Kshs 366 billion.
While cash and cash equivalents grew by 186% to Kshs 247 billion up from Kshs 86 billion. Investment in Government securities grew by 26% to Kshs 217 billion up from Kshs 172 billion.
Net interest income grew by 23 percent to Kshs 55 billion up from Kshs 45 billion driven by a 30 percent growth on customer loan book and 26 percent growth in investment in Government securities.
Non-funded income grew at 27% to reach Kshs 38 billion up from Kshs 30 billion to contribute 41% of the total income. Forex trading income grew by 77% to stand at Kshs 6.2 billion up from Kshs 3.5 billion. Diaspora remittances commissions grew by 76% to Kshs 1.5 billion up from Kshs 0.9 billion.
Volume of Forex trading increased by 51% to Kshs 863 billion up from Kshs 571 billion with Diaspora remittance contributing 32% of the volume of forex traded.
The Equity group said total operating costs grew by 67% to Kshs 71 billion up from Kshs 42.5 billion driven by a 496% growth in gross loan provision of Kshs 26.6 billion up from Kshs 5.3 billion in the prior year, increasing the cost of risk to 6.1% up from 1.3% the previous year. The higher loan loss provisions enhanced NPL coverage to 89%.
As part of the Group’s commitment to support lives and livelihoods, keep the lights of the economies on by avoiding massive disruption of economic activities, the Group accommodated Kshs 171 billion of loans for customers whose repayment capacity was adversely impacted by Covid-19.
This represents 32 percent of the entire gross loan book of Kshs 530 billion. As at 31st December Kshs 40 billion of the restructured loans had resumed repayments and normalized.
A deep dive review of the entire Kshs 171 billion accommodated loans revealed doubts on the future viability and quality on Kshs 9 billion of loans promoting the downgrade of the said doubtful loans to NPL (IFRS 9 Stage 3) increasing the NPL portfolio to 11% up from 10.4% as at 30th September 2020, and 9% as at the end of the previous year and closing the year with 23% accommodated loan book equivalent to 11% of the balance sheet.