Equity Bank Q1 net profit surges to Sh5.9bn
3 months ago, 17 Maý 10:09
Equity Bank #ticker:EQTY has recorded a 21.7 per cent rise in after-tax profit for the three months to March 2018, helped by an increase in interest income and lower provisions.
The lender’s net earnings for the first quarter stood at Sh5.9 billion, compared with Sh4.9 billion in the same period last year.
Equity chief executive James Mwangi attributed the rise in profit to a diversification strategy that eyed higher non-funded income, "prudent" lending on the back of rate caps which lowered bad loans and cost cutting measures aided by adoption of digital channels.
The top-tier lender’s loan book expanded by 3.5 per cent, or Sh9.17 billion to Sh271.1 billion, during the quarter.
Equity’s total interest income rose by 10.5 per cent to Sh12.6 billion in the period.
“We adopted a cautious approach in credit underwriting because of inability to price risk,” said Mr Mwangi on Thursday at an investor briefing.
"Digitization also helped us widen the profit margin," he added.
Interest income from loans and advances rose 6.97 per cent to Sh8.76 billion.
During the quarter, Equity Bank ramped up its purchase of government debt by 33 per cent to Sh150.1 billion which paid off as interest earnings from government securities rose by 24.96 per cent or Sh73.9 million to Sh3.7 billion.
The lender has lately shifted its focus to non-interest income to cushion itself from reduced interest income as a result of the rate cap law.
Its non-interest income went up by 6 per cent or Sh382.5 million to Sh6.71 billion in the period, helping it boost margins.
The lender’s loan loss provisions more than halved, by 55 per cent or Sh438.3 million, to Sh358.5 million in the quarter with its non-performing loan portfolio dropping by Sh1.4 billion to Sh18.1 billion in the period.
Its interest expenses went up 10.54 per cent to Sh2.85 billion.
Mr Mwangi said Equity would continue to focus on digital banking to drive growth and cut costs, adding that regional subsidiaries would anchor growth of its business in the long term.
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