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Steve Umidha @UmidhaSteve

Equity Group has announced a 24 per cent dip in profit to register Sh9.1 billion for the half-year ended June 30 from Sh12 billion in a similar period last year.

It said the performance during the period reflects the implementation of both defensive and offensive strategies to respond to the Coronavirus  situation that has transformed the operating environment.

The group’s total operating costs rose by 44 per cent to Sh26.7 billion up from Sh18.6 billion which the it attributed to a 15-fold increase in loan loss provision which jumped to Sh7.7 billion up from Sh500 million brought by adverse impact of Covid-19 pandemic.

Speaking  while releasing the results  Group Managing Director James Mwangi said despite non-performing loans (NPLs) showing a minimal decline from 10.9 per cent to 10.7 per cent quarter-on-quarter basis and stabilising below the 13.1 per cent industry average, the group still had to focus on prudence.

“Prudence dictated that we adopt a conservative humble approach in recognising the risk of uncertainty Covid-19 has imposed on the operating environment,” he said.

Impressive growth

Despite the impact of the Coronavirus pandemic the lender announced an impressive growth in loans deposits to customers which rose by 19 per cent while customers’ numbers climbed by 22 per cent during that period.

The group’s balance sheet grew by 17 per cent from Sh638.7 billion to Sh746.5 billion with customer deposits rising to Sh543.9 billion from Sh458.6 billion funding that it said was deployed to grow loans to customers by 22 per cent and investment in government securities by 20 per cent.

Non-funded income declined by 3 per cent from Sh4.5 billion to Sh14.1 billion as a result of the waiver of mobile transaction fee in Kenya since April 2020 to drive behavior change towards virtual banking enabled by mobile technology; and lower transactional activity given weak economic activity.

Customers gave Merchant Banking and Agency Banking a wide berth as transactional channels with merchant transactions stagnating as commissions declined by 10 per cent from Sh103.3 million to Sh93.3 million.

The further announced intentions to boost earnings through various digital platforms in the wake of coronavirus.

Last week, Equity completed the acquisition of a 66.53 per cent stake in Banque Commerciale Du Congo (BCDC), two months after the Kenyan lender pulled out of a similar deal, with London-listed firm Atlas Mara.

Pro-Credit bank

The deal, worth $95 million (Sh10.3 billion) now doubles the number of subsidiaries owned by Equity  Group in DRC Congo having acquired a German lender, Pro-Credit Bank in 2015, now Equity Bank Congo.

Mwangi said the merger will contribute more than 20 per cent of the bank’s total balance sheet with the potential of becoming the largest bank in DRC in 12 months.

“The addition of and amalgamation with BCDC will put Equity Group on the path to become a Sh1 trillion balance sheet business, that will benefit from economies of scale because we have the size and countrywide infrastructure that can bring our experience and capability to contribute significantly to the transformation of lives and livelihoods in DRC.”