Equity bank has registered a 14 percent decline in its Q1 profits to Ksh5.3 billion compared to Ksh6.2 billion the same period last year.
Commenting during the realizing of the results, Dr. James Mwangi, Group Managing Director and CEO said that the COVID-19 pandemic has mutated into a global economic crisis, occasioned by a sudden standstill of economic activity as a result of the global lockdown thereby resulting into unprecedented uncertainty within the global financial systems.
Net interest income grew by 11% on the back of a 24% year on year growth on loan book to Kshs. 379.2 billion up from Kshs. 305.5 billion, which reflected strain with the non-performing loan book growing to 10.9% up from 9.1% the previous year. Aggressive provisions saw the cost of risk rising to 3.24% up from 0.37%.
Total assets registered a 14% year on year growth to Kshs. 693.2 billion from Kshs. 605.7 billion driven by a 17% growth in customer deposits to Kshs. 499.3 billion from Kshs. 428.5 billion.
The Group’s total income grew by 13% to Kshs. 19.7 billion up from Kshs. 17.5 billion for the same period last year. Non-funded income grew by 16% outpacing the 11% growth on net interest income thereby increasing its contribution to 42% of the Group’s total income. Forex trading income grew by 34% to Kshs. 1.1 billion up from Kshs. 815 million with 26.5% of the volume traded contributed by diaspora flows. Diaspora remittances commissions grew by 22% to Kshs. 234 million up from Kshs. 192 million the previous year with the volume of diaspora remittances growing by 31% to reach Kshs. 40.6 billion up from Kshs. 30.9 billion the previous year. Merchant banking commission grew by 11% to Kshs. 582 million up from Kshs. 523 million the previous year with Merchant banking volume reaching Kshs. 29 billion up from Kshs. 25.6 billion.
Branches and ATMs processed only 6% of the Group’s banking transactions, while mobile and internet banking processed 79% of all transactions, with agents and merchants processing 15% of transactions making the Group an increasingly virtual digital financial service provider.
The bank’s regional subsidiaries increased their total revenue contribution to the Group’s revenue to 30% up from 28% the previous year, while raising their contribution of profit before tax to 26% of the Group’s profit up from 17%.
The bank had earlier this week canceled dividend payout to shareholders amounting to ksh9.5 billion due to uncertainty brought about by the novel Coronavirus pandemic, opting to strengthen its capital and liquidity positions to enhance capacity and cushion the business against external shocks that might be caused by the pandemic in the medium to long term.