Banking solutions provider Equity Bank group with has recorded a 21% growth in profit before tax in the first half of the year 2014.
Profit before tax increased to Kshs.10.8 billion up from Ksh. 8.9 billion recorded for the same period last year. Profit after tax also increased by 21% to Kshs.7.6 billion.
During the period under review, the Bank grew its total Assets by 16% to a record Kshs.303 billion up from Kshs.262 billion as at 30th June 2013. The Bank’s net loan book increased by 24% to Kshs.187 billion up from Kshs.151 billion while customer deposits increased by 15% to Kshs.216 billion up from Kshs.185 billion in June 2013. Shareholders’ funds increased by 19% to reach Kshs.53 billion.
Speaking during an investor briefing presentation at the Bank’s headquarters, Equity Bank Group Managing Director Dr. James Mwangi attributed the positive performance to the Bank’s strong fundamentals as well as an improved micro economic and investment environment which has renewed economic confidence in the region.
The bank’s regional expansion and diversification strategies have been successful and all the subsidiaries contributed positively to the performance.
The Bank’s profitability was underpinned by a 10% growth in total income supported by improved performance in non-funded income which offset a depressed interest income yield of 300 basis points following reduction of interest rates. Non-funded income grew by 19% driven mainly by the bank’s success in new strategic initiatives which saw merchants business and payments processing income grow by 58% while diaspora banking and remittances processing grew by 23%.
Contribution from non-funded income grew from 30.8% same period last year to 33.6% the current year.
Increase in total cost was contained to a marginal level of 2% following successful deployment of low cost delivery channels and in particular Agency banking which grew by 60% as well as mobile banking which was adopted by over 3 million customers. Quality in loan book was maintained resulting in reduction of provision charges in the period by 65% from Kshs.1.47 billion to Kshs.0.52 billion. NPL coverage ratio was maintained at 66%.
During the briefing session Dr. Mwangi further disclosed that the banks telecommunication subsidiary Finserve had progressed well in deploying the recently licensed Mobile Virtual Network Operations (MVNO). The roll out of prefix 0763xxxxxx will certainly level the telecommunication sector, liberate Kenyans from monopolistic hold, give them freedom, choice and control of their lifestyles while changing banking experience fundamentally.
Dr. Mwangi disclosed that the real innovation of Equity’s MVNO lay in the use of the thinsim, which will provide every Kenyan with a feature phone the opportunity to convert it into a dual sim phone. This would not only empower an estimated 25 million Kenyans to have a choice of at least twoconcurrent telecom service providers but also save them the inconveniences of constantly changing sim cards while saving the country billions of shillings that would go into buying dual sim phones to enable Kenyans to have a choice.
Dualsim phones capability would easily erode monopolistic power in the telecommunication sector and level the playing field which is essential for competitive environment where innovation, price and product will drive market behavior.
Access to the sim card will enable Equity Bank to bring the banking industry’s sharp focus on high security into mobile banking by enabling encrypting of data. Easy access to USSD and SMS will also enable Equity Bank to drive the cost of mobile banking down by breaking the commercial barriers hitherto placed by some telecoms which limited access to mobile banking services to the public through high charges.
“Our guiding philosophy and vision is to empower our people who are financially excluded or poorly banked access to banking and information technology solutions that are readily available to affluent members of society albeit at an affordable cost.” added Dr. Mwangi.
At the same time, Dr Mwangi disclosed that plans are at an advanced stage to further enhance its range of international payment solutions with the scheduled launch of American Express Credit card services.
The Bankhas already signed up partnerships with Visa, MasterCard, PayPal, Google, China Union Pay, SWIFT, JCB, VFX (Equity Direct) and Diners Club. The Bank has already retained key merchants including retailers; Nakumatt Holdings, hospitality concerns ArtCaffé, Heritage Hotels, Best Western Hotel, Imperial Hotel, Laico Regency, Leopard Beach Resort and Boma Hotels ahead of American Express services launch.
Dr. Mwangi expressed confidence that the impressive performance will be sustained well into the future. Equity Bank will continue to roll out innovations that would bring affordability of banking services while the Equity Bank Group Foundation will continue to scale its initiatives of enhancing the capacity of our people to participate in economic development, said Dr. Mwangi.The Bank was recently voted and named as the Bank with the lowest charges in East Africa by Think Business while researchers from International Certification Associations last week also named Equity Bank the most preferred Banking Services Provider in Kenya.