Equity Group’s bet on key East African economies has started paying off, with regional businesses contributing 47% of the bank’s profit in the third quarter (Q3) of 2024.

During the period under review, Equity Group recorded Profit after Tax of Ksh40.9 billion, representing a 13% growth from Ksh36.2 billion posted in the same period last year.

Equity Bank Tanzania Ltd. (EBTL) ‘s profit increased by 14 percent to Ksh0.8 billion, while Equity Bank Rwanda Limited (EBRL) ‘s profit increased by 36 percent to Ksh3.8 billion.

Equity Bank Uganda Limited’s (EBUL) earnings dropped by 14% to Ksh2.4 billion, alongside Equity Bank South Sudan, which declined by 61% to Ksh0.6 billion. Equity BCDC maintained its profit at Ksh11.4 billion.

The regional businesses also contributed 48% of the Group’s total assets, which stood at Ksh1.7 trillion as of September 30, 2024.

Equity Group Managing Director James Mwangi said the East Africa region is one of the fastest growing economies in the world, with an average GDP of 5.6%.

“This gives us huge prospects for the future, and we are excited for what is to come. What sets Equity apart is our ability to enter foreign markets and achieve greater profitability than in our home market. This is a testament to our strong strategy and adaptability,” he added while releasing the Q3 results.

In the period under review, the Group saw its deposit franchise grow 9% year-on-year to Ksh1.3 trillion, and its customer base now stands at 21.3 million.

This growth in deposits has resulted in a 12% increase in cash and cash equivalents to Ksh295.5 billion and growth in investment securities to Ksh468.1 billion, resulting in an overall strong liquidity position of 55%.

Shareholders’ funds grew by 17% to Ksh227.0 billion, strengthening the Group’s ability to deliver the private sector-led Africa Resilience and Recovery Plan (ARRP) by investing in new subsidiary undertakings in the Insurance Group.

The company registered robust top-line growth, with interest income growing by 13% to Kshs125.9 billion from Ksh111.1 billion during the period under review despite the high inflation and interest shocks.

This saw returns to customers in the form of interest expense grow 18% to Ksh45.3 billion from Ksh38.5 billion.

Non-funded income continued to grow steadily, increasing by Ksh2 billion and yielding a total income growth of 8% to Ksh138.9 billion, up from Ksh128.9 billion year-on-year.

The Group’s offence strategy of regional and product diversification continues to bear fruit, with the Kenya banking subsidiary contributing 47% of revenue, up from 52% in the previous period.

As business continues to grow in the Democratic Republic of the Congo (DRC) and with synergies realised from the Cogebanque acquisition in Rwanda, subsidiaries now account for 47% of total loans, up from 46% in 2023 and contribute 47% of profit after tax.

The global operating environment, characterised by macroeconomic shocks, saw the Group maintain its conservative and prudent defensive approach by booking adequate loan loss provisions amounting to Ksh12.7 billion.

This has resulted in an NPL coverage ratio of 67% with a Non-Performing Loans (NPL) ratio of 13.4%, below the latest published industry average of 16.7%.

This performance is complemented by strong capital buffers with a core capital ratio of 15.9% and a total capital ratio of 18.3% versus the regulatory threshold of 10.5% and 14.5%, respectively.

In 2024, Equity Group identified insurance as critical to contribute to social economic prosperity by ensuring business and individual resilience and security.

The Group was recently granted a general insurance license in addition to the already existing life assurance license.

Equity Life Assurance (Kenya), the Group’s first underwriting subsidiary, posted an 181% year-on-year profit before tax, closing at Ksh1.07 billion year-to-date, up from Ksh381 million for the same period last year.

ELAK reported a capital adequacy ratio of 141%, indicative of the business’ strong ability to meet its obligations to customers. With return on average assets at 4.6% and return on average equity at 57.8%, ELAK continues to contribute positively towards the Group’s performance.

“Insurance penetration remains low, and Equity aims to disrupt and transform that. Over the past two years, we’ve invested in understanding our customers and the real market needs, particularly in distribution. With our extensive network and customer-focused products, we’re reshaping insurance to be truly fit for purpose,” said Angela Okinda, Managing Director, Equity Life Assurance (Kenya) Limited.

The improved performance saw earnings per share increase to Ksh10.4, up from Ksh9.2.