Equity Bank Group Q3 profit up 5% despite slower growth in Kenya

Equity Bank Group has reported a five per cent growth in net earnings for the first nine months of this year, reaching approximately 36.2 billion Kenyan shillings. This increase is largely attributed to stable earnings in the bank's subsidiaries outside of Kenya. Despite facing significant macroeconomic challenges in its home market, the bank's strategic diversification and regional expansion have helped offset the impact of these headwinds. Dr. James Mwangi, the CEO of Equity Group Holdings PLC, highlighted the resilience of the bank in weathering the economic challenges faced in Kenya. He noted that the depreciation of the Kenyan shilling, high inflation, and elevated interest rates set by the government had posed challenges for the bank. However, the performance of Equity Bank's subsidiaries outside Kenya, which contributed 50% of the profit after tax and 47% of the total assets of the group, helped cushion the impact of the challenging environment in Kenya. Dr. Mwangi emphasized the growth and maturity of the bank's subsidiaries in different markets, with DLC leading as the fastest-growing market, followed by Rwanda, Tanzania, and Uganda. Kenya experienced a decline in profitability, but this was offset by the growth in other subsidiaries. The bank's balance sheet remains strong, with liquidity at 47%, robust capital buffers, and fortified asset quality with non-performing loans below the industry average. Despite facing cost pressures, Equity Bank has absorbed these costs to support its customers during challenging times. Dr. Mwangi highlighted the bank's commitment to shielding customers from the impact of inflation and currency depreciation, demonstrating a customer-centric approach in managing financial pressures. Amid concerns about rising interest rates in Kenya and potential default risks in the banking sector, Dr. Mwangi explained the rationale behind the bank's decision to increase lending rates in response to market conditions. While interest rates in Kenya spiked due to inflation and liquidity challenges, Dr. Mwangi expressed optimism that these were temporary issues. He emphasized the bank's focus on maintaining stable rates to support customers and avoid non-performing loans. Looking ahead, Equity Bank remains confident that interest rates will gradually decline, aligning more closely with regional rates and supporting economic recovery. The bank's long-term strategy includes prudent risk management practices and a customer-focused approach to navigate evolving market conditions and support sustainable growth.