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Kenya's Equity Group profit doubles, to resume dividends

08/17/2021 | 05:46am EDT
FILE PHOTO: Equity Group's Chief Executive Officer James Mwangi addresses investors at the Equity Bank headquarters in the Upper Hill district of Nairobi

NAIROBI (Reuters) -Kenya's Equity Group will resume dividend payouts this year, scrapped last year because of the COVID-19 pandemic, its chief executive said on Tuesday after the bank reported doubling its first-half pre-tax profit.

Equity's pre-tax profit was boosted by higher interest income and a fall in bad loan provisions, which it increased five-fold last year in response to the coronavirus outbreak.

Kenya's central bank allowed lenders in March 2020 to restructure loans for firms hit by the pandemic and gave them until March 2 this year to carry out the restructuring.

"The board ... committed to a payout of between 30 and 50% of profit after tax," Chief Executive Officer James Mwangi told investors. "We have gone back to dividend payouts."

Equity suspended dividend payouts both last year and in 2019.

Mwangi said out of 171 billion shillings' worth of loans restructured due to the pandemic, payments on 103 billion shillings resumed in the first half, with payments on further 56 billion shillings' worth of loans to resume in the next 12 months.

Kenya's second biggest lender by assets, which also operates in South Sudan, Tanzania, Rwanda, Uganda and the Democratic Republic of Congo, said its first-half profit jumped 99% to 23.83 billion shillings ($218.02 million) from a year earlier.

Interest income rose to 31.15 billion shillings from 24.64 billion shillings, while bad loan provisions fell to 2.91 billion shillings from 8.02 billion shillings.

Mwangi said digital banking was also expected to be a big driver of performance, after the amount of transactions handled rose 66% in the first half.

"Banking has become 24 hours," he said.

Net loans jumped 29% to 504.8 billion shillings, Equity Group said, adding it expected them to grow 20-25% for the full year.

($1 = 109.3000 Kenyan shillings)

(Reporting by George Obulutsa; Editing by Ayenat Mersie and Tomasz Janowski)

By George Obulutsa

ę Reuters 2021
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