26 July 2012

Kenya: Equity Posts Profit Growth for H1 2012

Equity Bank has posted a 14 percent growth to Sh5.40 billion in its net profit for the first half of 2012.

Despite the challenging micro-economic environment characterised by high inflation, sharp interest rate hikes and foreign exchange volatility, the banks net loans grew by 27 percent to Sh124.4 billion, which Equity Chief Executive Officer James Mwangi attributed to their robust business model.

"Our growth in the first half of 2012 shows our ability to generate steady returns despite the current challenging operating environment," he said.

"We will continue to leverage on the business model and innovation such as agency banking and mobile enabled technology to create more efficiency and accessibility," he added.

Total income rose by 34 percent from Sh13.15 billion to Sh17.56 billion and total assets grew by 29 percent to Sh220 billion, driven by the growth in loans and advances, as well as prudent cost management measures.

The bank's total customers grew from 6.3 million to 7.8 million, resulting in a 22 percent growth in customer deposits from Sh124 billion to Sh151 billion.

Mwangi noted that the growth was also a result of innovative use of alternative delivery channels such as agents and the bank's mobile banking platform known as Eazzy 24/7.

Agency banking has seen the number of agents grow to 5,004 from 2,301 in 2011 which represents a growth of 117 percent.

"The bank agency network is processing 25 percent of all cash transactions and this has enhanced access by the customers to the bank's products and services, while making our services convenient," he explained.

The bank continued to be well capitalised as reflected by the 27 percent capital adequacy ration which is well above the 12 percent statutory requirement, while the liquidity of the bank stood at 39 percent which is also above the 20 percent statutory requirement.

Total operating expenses increased from Sh7.3 billion to Sh8.1 billion.

Mwangi, who was awarded the 2012 Ernst & Young World Entrepreneur of the Year, said the bank's constant focus on exceptional customer experience, relationship banking, capacity building among staff and an effective governance structure has created huge social impact by enhancing financial access through scholarships and financial literacy programmes.

"Africans are embracing the power of entrepreneurship to change the economic and social state of Africa, so as to solve the African paradox of a continent endowed with resources, human capital and yet weighed down by abject poverty," he stated.

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