Equity Group net profit for the first six months to June grew 98.4 per cent to Sh17.9 billion driven by growth in interest and non-interest income and cuts in provisioning for loan defaults.
The group’s earnings rose from Sh9.02 billion recorded in a similar period last year as revenues across the subsidiaries — except South Sudan — increased.
The six-month earnings are equivalent to 90 per cent of the Sh19.79 billion the group posted in full-year 2020, placing it on a recovery path from Covid-induced economic hardships that had hit profits for all lenders.
“The strong capital and liquidity ratios have positioned the group well for continued execution of the offensive strategy particularly in light of improving asset quality and an improving operating environment,” said Mr James Mwangi, chief executive at Equity Group in Nairobi yesterday.
Equity slashed loan loss provisioning by 66 per cent to Sh2.6 billion in contrast with Sh7.6 billion that had been made in the preceding similar period.
The Sh5 billion cut in provisioning for loan defaults, added to the record half-year profits for the lender that last year beat KCB Group to number one in profitability.
Net interest income grew 26 per cent to Sh31.2 billion in line with 29 per cent growth in loan book to Sh504.8 billion.
Non-interest income, mainly derived from fees and commission, increased by 45 per cent to Sh20.4 billion, giving the lender a high-income position.
Gross non-performing loans stood at Sh43.82 billion at the end of June compared with Sh42.82 billion, with the muted rise helped by recoveries and repayments.
Out of the Sh171 billion Covid-19 restructured loan book, Sh162 billion is classified as performing while Sh5 billion is in default.
Mr Mwangi said Sh6 billion has been fully repaid while Sh64 billion remains under Covid-19 moratorium, constituting 11 per cent of Equity’s entire loan book.
All the subsidiaries—except South Sudan—posted growths in profit, taking their share in total earnings to 21 per cent.
Equity’s rebound followed easing Covid-19 control measures that has triggered a gradual recovery in the economy, prompting banks to boost lending amid repayment of defaulted loans.
Slowed lending followed reduced economic activity after Kenya’s first Covid-19 case in March last year, and costs linked to mounting defaults that ensued, which cut lenders’ profits by 29.5 per cent last year.
Central Bank of Kenya data shows that the pre-tax earnings in the five months had risen by 42 per cent to Sh76.4 billion from Sh53.9 billion posted in a similar period last year.