Equity Bank
Equity Group

Equity Bank reports a 25% rise in net profit to Ksh. 16 Billion in Q1

Equity Bank has reported a 25% increase in after tax profits to KSh 16 Billion for the first quarter of the year.

This rise in profitability was on the back of a a 21% growth in non-funded income to Ksh 22.2 Billion and a 28.4% increase in net interest income to Ksh 27.8 Billion. Net interest income, which is the money earned from loans and investments after subtracting interest expenses, rose by 28.4% to Ksh 27.8 Billion. This growth was driven by a 32.7% increase in total interest income to Ksh 43.0 Billion, but was partially offset by a 41.4% rise in interest expenses to Ksh 15.2 Billion.

Non-funded income, which includes fees and commissions rather than interest, increased by 21.0% to Ksh 22.2 Billion. This was mainly due to a 127.5% surge in other operating income to Ksh 4.8 Billion, a 19.2% rise in fees and commissions to Ksh 10.9 Billion, and a 37.6% increase in fees from loans to Ksh 2.8 Billion. However, income from forex dealings declined by 25.6% to Ksh 3.8 Billion.

Operating expenses on the other hand excluding provisions, increased by 19.7% year-on-year to Ksh 23.6 Billion. This rise was mainly driven by a 20% increase in other expenses to Ksh 13.5 Billion and an 18.4% increase in staff costs to Ksh 7.9 Billion. Despite the increase, the group’s cost-to-income ratio decreased by 137 basis points year-on-year to 47.1%. Loan loss provisions surged by 74.5% year-on-year to Ksh 6.1 Billion due to a 50.0% increase in gross non-performing loans to Ksh 120.4 Billion.

“We believe that NPLs will remain elevated for quite some time because of the trading effect,” Equity Group CEO James Mwangi said on Monday morning, “We know in the region, the effect of flooding will affect NPLs.” The bank expects NPLs to ease from the fourth quarter of 2024.

Net loans and advances increased by 3.0% year-on-year to Ksh 779.3 Billion, while government and investment securities rose by 20.6% to Ksh 473.2 Billion. Customer deposits improved by 11.3% year-on-year to Ksh 1.2 Trillion, while borrowed funds decreased by 3.9% to Ksh 109.6 Billion.