Equity Group has announced its 2023 half-year results, showcasing remarkable resilience amidst a backdrop of a challenging global macroeconomic landscape characterized by persistent high inflation, elevated interest rates, volatile exchange rates, and currency devaluation in emerging economies. The Group’s performance showcased notable growth, with a 23% increase in funding driven by a 21% rise in customer deposits and a 29% surge in shareholders’ funds, attributed to the recovery of mark-to-market losses on Eurobonds.

The growth trend continued with a 26% expansion in net loans to customers and a 33% rise in investments in government securities. Yields on government securities and loans also saw upticks, with investment yields increasing to 11.1% from 10.1%, and loan yields growing to 11.9% from 11.4%. Despite the challenging environment, Equity Group’s diligent efforts led to a profit after tax of 9%, underscoring its adaptability.

Dr. James Mwangi, Group Managing Director and CEO, noted, “Our strategic approach has positioned us well to navigate the challenges posed by macroeconomic headwinds. Diversification and regional expansion have enabled us to reduce reliance on the Kenyan banking subsidiary, with other segments contributing significantly to total assets and Profit Before Tax. We have achieved considerable success in non-funded income growth, with total income expanding by 24%, driven by a remarkable 42% increase in non-funded income and 17% growth in net interest income.”

In the face of a volatile operating landscape, the Group maintained its defensive stance, upholding a strong liquidity ratio of 51.1% and robust capital ratios of 15.1% for core capital to risk-weighted assets and 19% for total capital to risk-weighted assets. Despite macroeconomic challenges, the Group demonstrated its commitment to asset quality management, achieving an NPL (non-performing loan) ratio of 9.8%, outperforming the industry average of 14.9%. The prudent approach included increased provisions to cover rising portfolio at risk (PAR) ratios, resulting in a growth of cost of credit risk to 1.9% from 1.3%.

In response to the volatile operating environment, the Group bolstered its leadership team by recruiting skilled executives equipped to address the growth-related challenges. Despite operating in a challenging environment, the Group’s strategic focus on payments, trade finance, FX business, and non-funded income generation, coupled with a dedication to efficiency through digitization, led to the attainment of its financial targets.

The culmination of these efforts reflected in the 2023 half-year results, with a Profit After Tax of Kshs. 26.3 billion, signifying a Return on Equity of 27.7% and a Return on Assets of 3.5%. Dr. Mwangi expressed confidence in the Group’s strategic positioning, asserting that Equity Group is a pivotal regional systemic bank, poised to foster integration and cross-border trade within the African Continental Free Trade Area.

As East Africa continues to be the world’s fastest-growing region, Equity Group’s strategic approach aligns with regional governments’ focus on fiscal consolidation. The Group’s commitment to sustained value creation and its ability to weather challenges underscores its pivotal role in the region’s growth journey.