Equity Group Holdings has reported robust financial results for the third quarter of 2024, showcasing a 13 percent increase in profit after tax, which amounted to Kshs. 40.9 billion. The Group’s earnings per share rose to Kshs. 10.4, up from Kshs. 9.2, underlining its continued strong performance despite macroeconomic headwinds.
Key highlights
- Profit Growth: The profit after tax for Q3 2024 grew by 13 percent to Kshs. 40.9 billion.
- Asset Expansion: Total assets increased by 8 percent to reach Kshs. 1.7 trillion, driven by strong growth in deposits and investments.
- Deposit Growth: The Group’s deposit base expanded by 9 percent, totaling Kshs. 1.3 trillion, while cash and cash equivalents rose 12 percent to Kshs. 295.5 billion.
- Regional Performance: Regional businesses contributed significantly, accounting for 51 percent of profit before tax and 48 percent of total assets, highlighting the success of Equity’s diversification strategy.
Strong liquidity and optimized balance Sheet
Equity Group’s Managing Director and CEO, Dr. James Mwangi, attributed the solid results to the Group’s strategic focus on maintaining strong liquidity and optimizing the balance sheet. The Group reduced expensive long-term borrowings by Kshs. 137.6 billion, resulting in improved financial efficiency.
“We are optimistic that the strong liquidity of the Group has positioned us well to support our customers as the economy shows signs of improvement. The reduction in Central Bank Reference rates in some of our key markets is a positive indicator,” said Dr. Mwangi.
Shareholders’ funds and revenue growth
Shareholders’ equity grew by 17 percent to Kshs. 227.0 billion, bolstering the Group’s capacity to pursue new investment opportunities. Total income increased by 8 percent to Kshs. 138.9 billion, with interest income rising by 13 percent to Kshs. 125.9 billion. This growth was partially offset by a rise in interest expenses, which increased by 18 percent to Kshs. 45.3 billion, reflecting the high-interest rate environment.
Regional and product diversification strategy
Equity Group’s regional diversification strategy continues to yield positive results. The Kenya banking subsidiary now contributes 47 percent of the Group’s revenue, down from 52 percent previously, as subsidiaries in countries like the Democratic Republic of Congo (DRC) and Rwanda gain momentum. Subsidiaries now account for 47 percent of total loans and contribute 47 percent of profit after tax.
Prudent risk management and loan provisioning
In light of the challenging global economic environment, the Group maintained a conservative risk approach, setting aside Kshs. 12.7 billion in loan loss provisions. This resulted in a Non-Performing Loan (NPL) coverage ratio of 67 percent significantly higher than the industry average of 16.7 percent.
Insurance expansion and technological advancements
Equity Group’s focus on diversifying its product offerings saw significant growth in its insurance business. The Group’s first underwriting subsidiary, Equity Life Assurance Kenya (ELAK), posted a remarkable 181 percent increase in profit before tax, reaching Kshs. 1.07 billion. ELAK’s capital adequacy ratio of 141 percent reflects its strong financial health.
The Group’s digital transformation strategy has also been pivotal, with 86 percent of transactions now conducted via digital channels. The “One Equity” offering continues to simplify customer experience by providing a one-stop shop for financial services.
Social impact and sustainability initiatives
Equity Group has maintained its commitment to sustainability and social impact. The Group planted 30 million trees as part of its environmental conservation efforts and extended over USD 200 million in climate finance. The Equity Group Foundation’s initiatives have empowered over 596,000 Micro and Small Enterprises (MSMEs) through entrepreneurship training, disbursing Kshs. 323.3 billion to support business growth.
The Group’s Education and Leadership Development program awarded Kshs. 2.8 billion in scholarships, benefitting students from Kenya, Rwanda, Uganda, and the DRC. The Equity Leaders Program continues to send scholars to prestigious global universities, including Ivy League institutions.
Outlook
Dr. Mwangi expressed confidence in the Group’s strategic direction, underscoring its commitment to sustainable growth and resilience. “Equity Group remains focused on advancing sustainability while navigating a complex regulatory landscape. We continue to lead in climate finance and provide innovative financial solutions that meet the needs of our diverse customer base,” he noted.
With a return on average equity of 24.5 percent and a return on average assets of 3.1 percent, Equity Group Holdings Plc stands as one of the most profitable financial institutions in the region. As the Group pursues further expansion and digital innovation, it aims to maintain its leadership position in the African banking sector while contributing to socio-economic development and environmental sustainability.