(Nairobi) – Equity Bank Group has posted a net profit of KSh 41.9 billion for the first nine months of the year, marking a 13.1 percent increase over the same period last year. The growth in profits was largely supported by high-yield government bonds, while traditional customer loans fell by five percent to KSh 800.1 billion.
According to James Mwangi, CEO of Equity Bank Holdings, the challenging economic environment prompted the bank to focus on diversified investments, including increasing provisions to guard against loan defaults. Inflation and currency depreciation also influenced the bank’s strategic shift toward government bonds, which provide more stable returns.
Equity invested KSh 468.1 billion in government bonds this period, representing a five percent increase over last year. At the same time, the amount of traditional customer loans fell from KSh 845.9 billion in 2023 to KSh 800.1 billion.
Mwangi explained that, in response to global economic pressures, the bank adopted a “conservative and defensive” approach. This included setting aside KSh 12.7 billion in loan loss provisions, which achieved a Non-Performing Loan (NPL) coverage ratio of 67 percent. Equity’s NPL ratio stands at 13.4 percent, below the industry average of 16.7 percent, underscoring the bank’s effort to mitigate risks.
The bank’s overall income grew significantly during the period. Interest income climbed 13 percent to KSh 125.9 billion, up from KSh 111.1 billion the previous year. Meanwhile, interest expenses paid to customers rose by 18 percent to KSh 45.3 billion. This strong performance in interest income helped drive total income up by eight percent, reaching KSh 138.9 billion compared to KSh 128.9 billion last year.
| Financial Performance Highlights | Amount (KSh) | Growth (%) |
|---|---|---|
| Net Profit | 41.9 billion | 13.1 |
| Investment in Government Bonds | 468.1 billion | 5 |
| Customer Loans | 800.1 billion | -5 |
| Loan Loss Provisions | 12.7 billion | N/A |
| Total Income | 138.9 billion | 8 |
| Return on Average Equity | 24.5% | N/A |
| Return on Average Assets | 3.1% | N/A |
A shift in the bank’s income sources highlights the success of its regional and product diversification strategy. In previous years, the Kenya subsidiary contributed over half of the bank’s revenue, but now it accounts for 47 percent. Regional subsidiaries, particularly in the Democratic Republic of the Congo (DRC) and Rwanda (boosted by the acquisition of Cogebanque), contributed 51 percent of profit and 47 percent of total loans.
Equity Group’s financial stability is further supported by strong capital buffers, with a core capital ratio of 15.9 percent and a total capital ratio of 18.3 percent, both exceeding regulatory thresholds. Mwangi stated, “The Group has sufficient cushion on its key balance sheet buffers of liquidity, capital, and NPL coverage, reporting above-industry profitability with a return on average equity of 24.5 percent and a return on average assets of 3.1 percent.”
Operating costs, excluding provisions, rose by 19 percent, largely driven by investments in technology and rising inflation. These costs impacted the bank’s operational efficiency, but robust income growth offset these expenses, helping to maintain positive earnings. As a result, Equity’s earnings per share rose to KSh 10.4, up from KSh 9.2 last year.
The bank’s report also notes continued emphasis on its “defensive approach” to navigate the volatile economic landscape.