James Anyanzwa
29 April 2008
Nairobi — EQUITY Bank has announced a 81 per cent growth in pre-tax profit in the first quarter of the current financial year.
Profitability grew to Sh908 million from Sh503 million earned in a corresponding period last year. After tax profit also grew by the same margin to Sh727 million.
"The major contribution to this performance has been the growth and improved efficiency in the bank, which emanates from our information technology system, which has lowered operation costs," Dr James Mwangi, the bank's chief executive, told an investors briefing yesterday.
At the Nairobi Stock Exchange, its shares closed at Sh227 yesterday from Sh218 on Friday.
Operating income grew by 89 per cent to Sh2.22 billion up from Sh1.17 billion within the same period last year.
Growth in operating income was mostly fuelled by interest income, which increased by 125 per cent to Sh1.12 billion from Sh497 million.
Total assets were up 130 per cent to Sh57 billion supported by among others, massive capital injection of Sh11 billion by Helios EB and additional long-term debt of Sh4.5 billion.
"The bank has recorded a very impressive performance for the first quarter given the uncertainties at the beginning of the year which resulted in slow down of economic activities," Mwangi said.
"We anticipate that performance will continue to improve in the second quarter with the recent political settlement in place."
Non-funded income in the bank rose 63 per cent to Sh1.1 billion from Sh673 million, driven mainly by foreign exchange income and fees on loans and advances.
Mwangi said liquidity was still high at 74 per cent and the bank was exploring more avenues to invest the excess liquidity, including more lending to customers to bring down the ratio to the industry average.
The amount of money given by the bank in loans and advances grew by 80 per cent to Sh13.8 billion, with total non-performing loans remaining stable at below six per cent.
Last week, the bank announced its long-awaited expansion into the region with the proposed acquisition of the leading microfinance company in Uganda - Uganda Microfinance Ltd.
Mwangi said the deal wasstill awaiting regulatory approvals from both countries. The bank's entry into Uganda is widely viewed by analysts as long overdue going by grip on the Kenyan market.
The proposed acquisition is part of the bank's strategy to deploy its capital in consolidating its growth.
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