18 April 2014

Kenya: Transaction Fees Drives Up Equity's Q1 Earnings

EQUITY bank's profit after tax rose 20.68 per cent to Sh3.88 billion during the first three months of this year compared to Sh3.21 billion posted during a similar period in 2013.

The growth was driven by a 23.9 per cent growth in non-interest earnings to Sh4.13 billion and an 18 per cent increase in cheap deposits to Sh206.58 billion, the bank's financial performance results showed yesterday.

Equity said it cemented its leadership in customer accounts, registering 250,000 more in the quarter to reach 8.7 million customers.

It lent out Sh39.75 billion more during the review quarter of 2014 to Sh179.31 billion.

Interest income however remained flat, growing by two per cent to Sh7.02 billion in what CEO James Mwangi attributed slumping average lending rates to "present average of 14 per cent" from about 18 per cent previously.

The share of non-performing loans to total loan portfolio dropped to 4.2 from 5.1 per cent a year earlier on successful internal "remedial actions" and regulatory requirement to classify customers as defaulters within three months of failure to service their facilities, he said.

South Sudan however remains a managerial headache, the CEO admitted, saying the Sh700 million bad debt provision was still remained due to unresolved power struggle.

The subsidiary would have earned "about Sh1 billion last year but realised just about Sh250 million" in profits.

"This quarter, we have made the same as we made the whole of last year," he said. "This is because as shocks persist more and more customers from smaller banks are coming to us because we are a bigger bank," he said.

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