– In an impressive performance for the third quarter of the financial year, Equity Group Holdings Plc (EGH) reported a record-breaking profit after tax of Kshs. 40.9 billion. This achievement highlights the bank's continued resilience and growth amidst challenging economic conditions, including high interest rates in Key markets including kenya, and volatile exchange rates across its operating markets in East and Central Africa.

Key Contributors to Record Profit

The notable rise in profitability can largely be attributed to a 43% reduction in loan loss provisions, down to Kshs. 9.9 billion from Kshs. 17.5 billion in Q3 2023. This reduction indicates improved credit quality across its loan portfolio, underscoring Equity Bank's strategic focus on prudent lending practices in a challenging economic environment.

In addition to this, Equity Bank bolstered its revenue through a 5% increase in investments in government securities, now totaling Kshs. 468.1 billion. Cash and cash equivalents increased 12% to 295.5 billion. The bank’s net loan portfolio shrunk 5% to Kshs. 800.1 billion, generating Kshs. 125.9 billion in interest income, a 13% year-over-year increase. This top-line growth in interest income is further supported by the Group's repayment of Kshs. 137.6 billion in borrowed funds, resulting in decreased interest expenses.

Strong Balance Sheet and Asset Growth

Equity’s total assets grew by 1% to reach Kshs. 1.7 trillion by June 30, 2024, outpacing the national inflation rate of 4%. Regional subsidiaries now contribute a significant portion, with only 49.7% of total assets stemming from markets outside Kenya. The Group's deposit base also expanded by 11%, bringing deposits to Kshs. 1.3 trillion as it continues to attract new customers, growing its customer base to 20.7 million.

Reflecting on this growth, Dr. James Mwangi, Group Managing Director and CEO, commented, “We are optimistic that the strong liquidity of the Group has positioned us to effectively support our customers as the economy shows signs of improvement, marked by reduced Central Bank reference rates in some markets.”

Expanding Revenue Streams and Diversifying Investments

The Group's non-funded income, which includes fees and commissions, grew by Kshs. 2 billion, bringing total income growth to 8%, reaching Kshs. 138.9 billion, up from Kshs. 128.9 billion in the previous year. Equity’s regional expansion strategy continues to yield results, with Kenya now contributing only 43% of the Group's revenue, a decline from 46% in 2023, as the business in Democratic Republic of Congo (DRC) and new acquisitions such as Rwanda's Cogebanque show increasing profitability.

Future Prospects

Equity Group Holdings Plc is on track to pay dividends on Full year results. With a dividend policy of paying between 30-50% of earnings, the increased earnings per share of 10.8 raises hopes for a higher dividend payout.