Despite a challenging business environment, Equity Group says its business model enabled it to realise 8 per cent growth in profit after Tax for the third quarter to September 2018 to reach Ksh15.8 billion up from Ksh14.6 billion in 2017.
The group says the operating environment in Kenya in the last nine months was characterized by volatility in the business environment resulting in elevated inflation, continued interest rate capping, causing a credit crunch, and a lowered Central Bank Rate which dipped the yield on loans.
“A fortified liquid and agile balance sheet positioned the Group competitively in the uncertain operating environment while diversified revenue streams, geographic expansion and structural efficiency gains enabled the Group to weather the effects of interest rates capping,” the Group says in a statement.
The Group now has a liquidity ratio of 55 per cent, non-funded income contributes 40 per cent, subsidiaries contribute 18 per cent of earnings and costs have declined by 4 per cent over the past one year.
Meanwhile the Group Equity has reported differentiated revenue growth of 1 per cent to Ksh49.3 billion up from Ksh48.7 billion, despite the impact interest rates cap and the challenging operating environment have had on the banking sector. “Non-funded income held strong to reach Ksh19.8 billion driven mainly by remittance commissions, trade finance, agency and credit card fees and commissions,” it says.
“Equity Group business model has proven that the Group is not dependent only on the loan book income to drive shareholder value,” Equity Group Managing Director and CEO Dr. James Mwangi said and added: “We are reaping the benefits of a strong social brand that focuses on enhancing our relationship with the community through a shared prosperity approach to business.”
In the year, the Group’s execution of the 3.0 Strategy of digitization through its digital suite of self-service tools known as Eazzy Banking continued to pay off. Third-party channels reported an exponential growth of customer activity, contributing over 97 per cent of transaction volume.
Eazzy Banking App grew by 208 percent to 168 million transactions from 55 million YoY and a value of Ksh89 billion from Ksh52 billion year-on-year. Eazzy Biz, which is a cash management solution for SMEs had a rapid adoption in the market that resulted in a growth of 148 per cent year-on-year with a transaction value of Ksh187.3 billion from 90.9 billion year-on-year.
The agency network which has now grown to reach over 30,000 agents saw the transaction volume grow by 7 per cent to 53.4 million from Ksh49.8 million with value growing by 17 per cent to Ksh459.7 billion from Ksh391.3 billion.
Diaspora remittances grew by 282 per cent to Ksh57 billion from Ksh15 billion year-on-year due to increased strategic partnership with payment partners including PayPal, Equity Direct, Western Union, MoneyGram, Wave and Swift.
Income from Treasury Operations increased by 18 percent to Ksh15.7 billion from Ksh13.2 billion year-on-year driven by an increase in government securities portfolio to Ksh159 billion from Ksh 128 billion and increasing its contribution to the total income to 27 per cent.
The Group’s strategy of regional expansion and business diversification resulted in a double-digit growth across the subsidiaries with an increased profit before tax (PBT) of 18 per cent from 14 per cent year-on-year, validating the Group’s decision to expand into the East and Central Africa region and diversify in financial services offering. Uganda PBT grew by 35 per cent, Rwanda by 70 per cent, DRC by 117 per cent, South Sudan by 53 per cent.