Uganda: US $ 163 million – Equity reaches 99% of half-year profits
98% after-tax profit growth ($ 163.5 million)
50% total asset growth
51% deposit growth ($ 7.4 billion)
Net lending growth of 29% ($ 4.6 billion)
Nairobi, Kenya | THE INDEPENDENT | Equity Group Holdings Plc reported 98% growth in half-year profits to $ 163.5 million (Kshs 17.9 billion) from $ 83.1 million (Kshs 9.1) the previous year.
Speaking on the release of the results, Equity Group Managing Director and CEO Dr James Mwangi said, “The defensive and offensive strategy adopted by the group at the start of the Covid-19 pandemic to create resilience, agility and recovery has been very effective in positioning, navigation and driving performance. “
The offensive growth strategy saw deposits grow 51% to $ 7.4 billion (Kshs 820.3 billion) from $ 4.9 billion (Ksh 543.9 billion), while funds Long-term borrowings increased by 78% at Kshs. 102.3 billion Kshs. 57.6 billion.
Net loans and advances increased 29% to $ 4.6 billion (Kshs 504.8 billion) from Kshs 391.6 billion, while investments in government securities increased 46% to 315.5 Billion Kshs vs. Ksh 216.4 Billion, resulting in 50% growth of Total Assets to Ksh 1.12 Trillion vs. Ksh 746.5 Billion.
The aggressive growth strategy implemented by the Group resulted in a 33% growth in total revenue from turnover to Kshs. 51.6 billion Kshs. 38.7 billion thanks to a 26% growth in net interest income of Kshs. 31.2 billion against 24.6 billion Kshs and a 45% growth in unfunded income from fees, commissions and transactions to 20.4 billion Kshs against 14.1 billion Kshs.
The defensive approach focused on the high quality of assets, strong equity and liquidity buffers which enabled the Group to present a strong coverage of non-performing loans (NPL) of 92%, against 73% in previous year attributed to a decrease in loans Kshs 1.3 billion from Kshs 61.2 billion to Kshs 59.9 billion. The allowance for loan losses decreased by 66%, from Kshs 7.7 billion to Kshs 2.6 billion, to record a cost of risk of 1.2% compared to 4.2%.
The net bad debts decreased by Kshs. 5.4 billion to Kshs. 28.3 billion to Kshs. 22.9 billion due to the aggressive provisioning of the previous year as part of the defensive strategy. Ksh. 171 billion pounds of restructured loans Covid-19, Kshs. 162 billion are classified as successful with Kshs. 103 billion having resumed repayments, Kshs. 6 billion fully repaid, Kshs. 92 billion to date in reimbursement and Kshs. 5 billion non-performers. Only Kshs 64 billion remains under the Covid-19 moratorium, which represents only 11% of the entire loan portfolio. Total operating costs increased by 4% to Kshs 27.8 billion from 33% growth of total income to Kshs 51.6 billion, bringing profit before tax to Ksh 23.8 billion from Kshs 12 billion of Kshs, a growth of 99%.
Efficiency gains saw the cost-to-income ratio drop slightly to 48.5% from 48.8%, due to a reduction in the cost of funds to 2.6% from 2.9%.
Total capital on risk-weighted assets stood at 17.6% while core capital on risk-weighted assets stood at 14.1% as of June 30, setting the stage for the activity to accelerated growth.
“The strong capital and liquidity ratios have positioned the Group well for the continued execution of the offensive strategy, in particular in light of the improvement in asset quality and operational efficiency and a improving operating environment, ”added Dr Mwangi.
The 6 countries in which the Group operates have forecast strong GDP growth rates; Kenya 7.6%, Uganda 6.3%, Rwanda 5.7%, South Sudan 5.3%, DRC 3.8% and Tanzania 2.7% (IMF 2021 projections) with a fairly stable micro-economic environment , which places the Group in a good position to pursue its offensive and defensive strategy for resilience, agility, recovery and rapid growth.
The regional approach with Kenya, which now represents only 60% of the Group’s balance sheet, mitigates national shocks and sovereign risks. The Group’s efficiencies shared with the subsidiaries quickly translate regional growth into value-creating growth, with the majority of regional subsidiaries having an average return on equity greater than their cost of capital.