Paul Arithi 
The Equity Group PLC Management Led by The Group’s Chief Executive Officer and Managing Director, James Mwangi in a previous Financial Results FY 2021[Photo/PAUL ARITHI/B.Q]
- 29% growth in Balance Sheet to Kshs 1.305 trillion from Kshs 1.015 trillion
- 29% growth in customer deposits to Kshs 959 billion from Kshs 740.8 billion
- Emerges the largest bank in Kenya and in the region by all key parameters: balance sheet, profitability, market capitalisation and customer base
- Improvement in NPLs from 11% to 8.3% and increase of provision coverage from 89% to 98%
- 99% growth in Profit After Tax to Kshs 40.1 billion from Kshs 20.1 billion
- 98% growth in earnings per share to Kshs 10.40 from Kshs 5.20
- Record dividend pay-out of Kshs 11.3 billion, a 50% increase from last dividend pay-out for 2018
Equity Group has recorded superior performance for the year ended 31st December 2021 despite the challenging operating environment characterised by a global COVID-19 pandemic.
Profit After Tax increased by 99% to Kshs 40.1 billion from Kshs 20.1 billion with Profit Before Tax recording a growth of 134% to Kshs 51.9 billion up from Kshs 22.2 billion the previous year. The Group has recommended a record dividend payout of Kshs 3 per share totalling Kshs 11.3 billion which is a 50% jump from the previous dividend pay-out after earnings per share grew by 98% to Kshs 10.40 up from Kshs 5.20 the previous year.
Net interest income grew by 25% to Kshs 68.8 billion up from Kshs 55.1 billion. This was driven by a 23% growth in loan book to Kshs 587.8 billion up from Kshs 477.8 billion and an 81% growth in investment in Government securities to Kshs 394.1 billion up from Kshs 217.4 billion. Non funded income grew by 15% to Kshs 43.6 billion up from Kshs 37.8 billion driven mainly by trade finance, payment channels and foreign exchange trading income. Trade finance registered a 55% growth in revenue to Kshs 3.2 billion up from Kshs 2.1 billion.
Despite zero-rating mobile transaction offerings, transaction income grew by 37% to Kshs 10.4 billion up from Kshs 7.6 billion on the back of the E-commerce and Merchant banking business. Foreign exchange trading income grew by 33% to Kshs 8.3 billion up from Kshs 6.2 billion driven by diaspora inflows that grew 37% to reach Kshs 383.5 billion up from Kshs 279.4 billion.
Total income grew by 21% to surpass the psychological USD 1 billion mark to record Kshs 112.4 billion up from Kshs 92.9 billion the previous year. Despite a 24% growth in staff costs to Kshs 19.1 billion, growth in other operating costs to Kshs 36.5 billion up from the Kshs 30.6 billion, total costs recorded a decline of 16% to Kshs 60.5 billion down from Kshs 71.9 billion driven by an 81% decline in loan loss provision to Kshs 4.9 billion down from Kshs 25.9 billion the previous year. Portfolio at risk declined to 8.3% down from 11% with non-performing loan coverage increasing to 98% up from 89%. In absolute terms, total non-performing loans declined to Kshs 44.5 billion down from Kshs 50.6 billion.
Total Assets grew by 29% to Kshs 1.305 trillion up from Kshs 1.015 trillion driven by a corresponding 29% growth in customer deposits to Kshs 959 billion up from Kshs 740.8 billion resulting in excess cash being deployed in low yielding government securities at 9.6 %, while the cost to income remained fairly constant at 49.1% up from 48.5%. Return on Average Equity expanded to 26.1% up from 15.3% while Return on Average Assets grew to 3.5% up from 2.3% on the back of benefits of economies of scale and efficiencies of digitisation and a shift of business model from fixed costs to variable cost resulting in the enhanced returns.
The bulk of customers’ engagement and consumption of banking products and services is now on digital channels of the internet and mobile on self-service devices delivering a 24-hour banking experience and convenience. Banking has largely shifted from where you go to what you on do on your devices compressing geography and distance.
The Group’s offensive and defensive strategy has led to the achievement of the twin objective of securing the future while securing market gains of customer consolidation. Equity Group has now strategically positioned itself as a systemic regional diversified business in six countries with the dominant market in Kenya contributing only 59% and 63% of the Assets and Revenues respectively. Strict adherence to IFRS 9 has led to full recognition of lifetime risk in the Asset portfolio with provisions for the portfolio at risk being 98% and at 128% with credit risk guarantees.
“We have strengthened our business model to achieve an embedded shared value concept in our twin engine of social and economic aspirations and deliverables. We have scaled our social and environmental impact investments in capacity building and enhancement through education, health, and entrepreneurship training,” said Dr. Mwangi, adding, “We have strengthened our participation in formalising and integrating the informal sector in the real economy with the formal supply chains and ecosystems of agriculture, micro, small and medium enterprises. To strengthen the social contract of shared prosperity, Equity is celebrating the strong social brand and exceptional performance by offering 2,000 comprehensive Wings to Fly scholarships for 4 years at an anticipated cost of Kshs 2 billion representing shared prosperity with host communities.”
The Group has a positive outlook of the future. We have launched a Marshall Plan ‘Africa Recovery and Resilience Plan’ with a seed fund of USD 6 billion equivalent to Kshs 690 billion to act as a stimulus for the private sector. The ‘Africa Recovery and Resilience Plan’ is built on a platform of collaboration and cooperation for Public-Private Partnerships to transform the region through value addition and ecosystem development in 5 key areas:
- Primary sectors of Food and Agriculture, and extractive sectors
- Manufacturing and Logistics
- Trade and Investments
- Micro Small and Medium Enterprises
- Social and Environmental impact investments
The strategy aims at funding and financing 5 million businesses and 25 million households to reach 100 million people in Africa and to create 50 million jobs both directly and indirectly. By offering its rails and capability to drive this ambition, Equity hopes to be equally transformed to sustain the growth trajectory that has led it to sustain 10-fold growth every five years and to exponentially grow value for its shareholders.
“We are optimistic that the ‘Africa Recovery and Resilience Plan’ holds great promise for Africa’s socio-economic prosperity and Equity Group is well-positioned to catalyse this outcome,” concluded Dr Mwangi.
