Equity Group has announced a Ksh. 17.5billion net profit in nine months.
The period to September 30 saw increased customer lending and higher non-funded income growth.
“Essentially the bank has been able to reinvent itself in the last three years, and hence, we are where we were before the entry of interest rate caps,” Equity Group Managing Director James Mwangi said.
The third quarter earnings represent a 10 percent jump in earnings from a similar period last year.
They come on the backdrop of the lender’s continued pursuit of agility in its balance sheet against the stay of interest rate caps.
Equity’s loan book to customers soared 21 percent to Ksh.348.9 billion ahead of deposits which settled at Ksh. 478.1billion after a 19 percent growth year over year.
The bank reversed the decline of non-interest funded income (NFI) from last year to register a 14 percent jump in the revenue stream to Ksh. 22.5billion.
This is attributed to greater processing of digital payments.
As such, the bank significantly reduced its investment in the risk free government securities as mirrored in the mere five percent jump in the packing of funds in the Treasury.
At the same time, Equity found efficiency in the continued reliance on third party infrastructure and digital channels to contain operational costs.
93 percent of the bank’s transaction count in lending now sits outside the branch with the value of the transactions done matching up to the high valued branch transactions.
From the squeeze on efficiency, the lender marked an improvement in its cost to income ratio (CIR) to a low 51.3 percent at group level.
This as its Kenyan outfit regained the lowered CIR trajectory to post a cost to income ratio of 45.9 percent from 47 percent last year.
Moreover, the bank cuts its exposure to bad loans as the ratio of Non-Performing Loans (NPLs) came down further to 8.3 against a 12.6 percent industry average from an improved coverage of loan-loss exposure.
The bank expects the newly defined business model to keep the lender’s financial performance on the positive trajectory while only finding impetus from the recent repeal of interest rate caps on commercial lending.
“The removal can only be a bonus as it is unlikely to change the bank from a strategic perspective,” added Dr. Mwangi.
During the period, Equity Group saw an increase in its capital base to Ksh.677.1 billion to keep in touch with market leader KCB whose assets were valued at Ksh. 747billion at the end of Jun
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