Equity records increased loans and deposits amidst the COVID-19 pandemic

Equity Group Holdings PLC (EGH) today announced its half-year results for the period ended 30th June 2020 reflecting a 24% decline in profitability from Kshs.12.0 billion to Kshs.9.1 billion for the corresponding period the previous year.

Topline net interest income was up 17% to Kshs.24.6 billion up from Kshs.21.1 billion the previous year driven by a 22% growth in loan book from Kshs.320.9 billion to Kshs.391.6 billion.

Non-funded income declined by 3% from Kshs.14.5 billion to Kshs.14.1 billion as a result of the waiver of mobile transaction fees in Kenya since April 2020 to drive behavior change towards virtual banking enabled by mobile technology, and lower transactional activity given weak economic activity.

Customers shied from use of Merchant Banking and Agency Banking as transactional channels with merchant transactions stagnating as commissions declined by 10% from Kshs.103.3 million to Kshs.93.3million as agency cash in cash-out transaction volume declined by 20% from Kshs.54.031 billion to Kshs.42.975 billion with resultant commission declining by 25% from Kshs.1.055 billion to Kshs.789 million.

However, retail digital commerce payments Eazzy Pay and Pay with Equity recorded 49% growth in a cumulative number of transactions from 1.152 million to 1.719 million transactions as value of transactions grew by 52% to reach Kshs.9.8 billion up from Kshs.6.4 billion.

Total costs increased by 44% to Kshs.26.7 billion up from Kshs.18.6 billion driven by a 15-fold increase in loan loss provision which increased to Kshs.7.7 billion up from Kshs.500 million in recognition of portfolio risk associated with the adverse disruption of COVID-19 health pandemic control, management and containment measures and resultant economic shocks and disruptions of supply chains by economic lockdowns.

“Despite NPLs showing a minimal decline from 10.9% to 10.7% quarter on quarter basis and stabilizing below the 13.1% industry average, prudence dictated that we adopt a conservative humble approach in recognizing the risk of uncertainty Covid-19 has imposed on the operating environment” said Dr. Mwangi, The Group Managing Director and CEO while releasing the results.

EGH balance sheet grew by 17% from Kshs.638.7 billion to Kshs.746.5 billion driven by 19% growth in customer deposits to Kshs 543.9 billion from Kshs 458.6, funding that was deployed to grow loans to customers by 22% and investment in Government securities by 20%.
Regional subsidiaries grew faster increasing their contribution to the Group profitability to 28% up from 26% same period the previous year.

Post balance sheet date, the Group completed the acquisition of 66.53% of BCDC the second largest bank in DRC paving way for the Group to achieve a systemic position after merger and amalgamation of the two subsidiaries in DRC.