Equity Group reports 36% growth in net profit in Q1 2022

Equity Group Holdings PLC has announced a remarkable 36% increase in profit after tax for the first quarter of 2022, reaching Ksh11.9 billion compared to Ksh8.7 billion from the previous year. The CEO of Equity Group, James Mwangi Fumwa, highlighted the key factors attributing to this growth during a live interview on CNBC Africa. Mwangi emphasized that the performance was primarily driven by a 28% surge in loans, allowing the bank to support its clients in the post-pandemic recovery phase. The net interest income group also saw a significant increase of 21%, while cost control measures, including digitization, led to a 13% growth in costs and ultimately contributed to the impressive profit surge. Looking ahead, Equity Group is shifting from a defensive strategy adopted during the pandemic to a more offensive approach, focused on expanding customer outreach and enhancing asset allocation. The bank is working on digitizing its services to offer greater convenience and accessibility, with a goal to transform into a 24-hour banking solution. By leveraging digital channels and reducing brick-and-mortar operations, Equity Group aims to optimize costs and improve operational efficiency. In terms of market performance, Equity Group's presence in six countries, including the Democratic Republic of Congo (DRC) and a representative office in Ethiopia, has shown promising results. Several subsidiaries, such as Kenya, Uganda, and Rwanda, are achieving a return of 4% on assets, while DRC witnessed an 18% growth in turnover. Notably, the bank has been successful in increasing market share across all subsidiaries, positioning itself as a market leader in customer acquisitions in the region. A key achievement highlighted by Mwangi was the reduction of non-performing loans (NPLs) from Ksh63.5 billion to Ksh59.4 billion. Equity Group's proactive approach involved providing accommodations to customers during the challenging period, such as loan restructuring and repayment breaks to promote business resilience. This strategy enabled many businesses to recover and normalize operations, contributing to the decline in NPLs and overall portfolio health. Addressing concerns about market volatility, Mwangi emphasized that Equity Group's diversified shareholder base has helped cushion the bank against external shocks. Despite recent foreign investor outflows on the Nairobi Securities Exchange, the bank has outperformed market expectations due to its strong financial performance. The CEO attributed the positive performance to investor confidence in the bank's growth trajectory and premium returns, noting that global economic factors have played a significant role in market dynamics. With Kenya gearing up for presidential elections, Mwangi expressed confidence in the country's governance and institutional framework to manage the electoral process smoothly. He highlighted the maturity of Kenyan institutions and the population's respect for governance structures, indicating that the upcoming elections are unlikely to disrupt the economic stability of the country. Mwangi projected a seamless transition post-election and a continued focus on economic growth and stability. In conclusion, Equity Group's impressive growth in Q1 2022 reflects a strategic shift towards customer-centric initiatives, digital transformation, and risk management strategies. With a strong market presence and a resilient business model, the bank is poised for further success in the coming months, supported by a robust foundation and a proactive approach to business challenges.