Equity Group Holdings Plc (EGH) has delivered a strong financial performance for the first half of 2024, reporting a profit after tax of Kshs 29.6 billion, a 12 percent increase from Kshs 26.4 billion in the same period last year. This result underscores the Group’s resilience in navigating a challenging economic landscape marked by high interest rates and volatile exchange rates.
Total assets grew by 6 percent to Kshs 1.75 trillion, outpacing the prevailing inflation rate of 4 percent. Deposits saw a significant increase of 11 percent, reaching Kshs 1.3 trillion. The Group’s regional operations have proven increasingly pivotal, with regional subsidiaries contributing 49.7 percent of total assets and 50.2 percent of profit before tax.
Dr. James Mwangi, Managing Director and CEO of EGH, expressed confidence in the Group’s financial stability, highlighting the strong liquidity position bolstered by a 55 percent increase in cash and cash equivalents to Kshs 341 billion. EGH also reduced its leverage by Kshs 75 billion, reflecting a strategic move to optimize its balance sheet.
“We are proud that the Group has sufficient cushion on its key balance sheet buffers being liquidity, capital and NPL coverage while at the same time it continues to report above industry profitability metrices with return of average equity of 26.7 percent and return on average assets of 3.4 percent,’’ Dr. Mwangi said
Dr.James Mwangi, Managing Director and CEO Equity Group holdings
Shareholders’ equity grew by 13 percent to Kshs 220 billion, reinforcing the Group’s capability to support the Africa Resilience and Recovery Plan (ARRP) and pursue new investment opportunities. Interest income surged by 22 percent to Kshs 84.8 billion, despite high inflation and rising interest rates. Non-funded income increased by Kshs 5 billion, contributing to a 16 percent rise in total income to Kshs 95.1 billion.
The Group’s regional diversification strategy is yielding positive results. While the Kenya banking subsidiary’s contribution to revenue decreased from 46 percent to 43 percent, subsidiaries in other regions now account for 47 percent of total loans and contribute 51 percent of profit after tax.
Amidst global economic turbulence, EGH adopted a conservative approach, increasing loan loss provisions by 35 percent to Kshs 8.5 billion. The Group maintains a solid Non-Performing Loans (NPL) coverage ratio of 70 percent, with an NPL ratio of 12.9 percent significantly below the industry average of 16.3 percent .
EGH continues to expand its product offerings with the recent acquisition of a general insurance license, complementing its existing life assurance license. This expansion aims to provide comprehensive financial services, including insurance solutions, across various customer segments. The Group’s extensive network of over 1.1 million agents and merchants will play a crucial role in distributing these new insurance products.
In technology and digital innovation, EGH has rolled out a unified product house under the One Equity offering, enhancing convenience and cross-selling opportunities. Digital channels dominate transactions, processing 84 percent of them, while agency channels handle 9 percent, and ATMs and branches account for the remainder.
The Group’s impact extends beyond financial performance. EGH has been recognized for its commitment to sustainability, with plans to release its third sustainability report soon. This report will detail the Group’s efforts in climate finance, including planting 29.5 million trees and extending Kshs 26 billion in climate finance.
Additionally, EGH has made significant strides in education and entrepreneurship. The Equity Leaders Program awarded scholarships worth Kshs 2.8 billion to 113 students, including 13 admitted to Ivy League universities. The Group also supported over 570,000 micro and small enterprises through the Young Africa Works Program, disbursing Kshs 355.4 billion and creating approximately 1.3 million jobs.
Overall, Equity Group Holdings Plc’s performance highlights its robust financial health, strategic diversification, and commitment to sustainability, positioning it well for continued growth and impact in the region.