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    EQTY   KE0000000554

EQUITY GROUP HOLDINGS PLC

(EQTY)
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Equity : Bank Announces 98 Percent Growth in Profits

08/23/2021 | 04:06am EDT

Equity Group Holdings Plc has announced a 98% growth in half-year profits to Kshs 17.9 billion up from Kshs 9.1 billion the previous year.

Equity Group managing director and CEO Dr James Mwangi said the defensive and offensive strategy adopted at the onset of the Covid-19 pandemic to create resilience, agility, and recovery, has been very effective in positioning, navigating and driving performance.

The offensive growth strategy saw deposits register a 51% growth to Kshs 820.3 billion up from Kshs 543.9 billion, while long term borrowed funds grew by 78% to Kshs 102.3 billion up from Kshs 57.6 billion.

Net Loans and advances grew by 29% to Kshs 504.8 billion up from Kshs 391.6 billion, while investment in government securities grew by 46% to Kshs 315.5 billion up from Kshs 216.4 billion - resulting in 50% growth in total assets to Kshs 1.12 trillion up from Kshs 746.5 billion.

The aggressive growth strategy effected by the Group resulted into a 33% growth in topline total income to Kshs51.6 billion up from Kshs 38.7 billion driven by a 26% growth in net interest income of Kshs 31.2 billion up from Kshs 24.6 billion and a 45% growth in non-funded income of fees, commission and transactions to Kshs 20.4 billion up from Kshs 14.1 billion.

DEFENSIVE APPROACH

The defensive approach focused on high asset quality, strong capital and liquidity buffers that saw the Group present a strong non-performing loans (NPL) coverage of 92% up from 73% the previous year attributed to a decline in gross non-performing loans by Kshs 1.3 billion from Kshs 61.2 billion to Kshs 59.9 billion.

Loan loss provision declined by 66% from Kshs 7.7 billion to Kshs 2.6 billion to register cost of risk of 1.2% down from 4.2%. Net non-performing loans declined by Kshs 5.4 billion from Kshs 28.3 billion to Kshs 22.9 billion due to the aggressive provisioning the previous year under the defensive strategy.

Of the Kshs 171 billion Covid-19 restructured loan book, Kshs 162 billion is categorized as performing with Kshs 103 billion having resumed repayments, Kshs 6 billion fully repaid, Kshs 92 billion up to date in repayment and Kshs 5 billion non performing. Only Kshs 64 billion remains under Covid-19 moratorium constituting only 11% of the entire loan book.

Total operating costs grew by 4% to Kshs 27.8 billion against a 33% growth in total income to Kshs.51.6 billion driving profit before tax up to Kshs.23.8 billion up from Kshs.12 billion a growth of 99%.

Return on Average Assets (ROAA) grew to 3.3% in spite of the 50% expansion in total assets while return on average equity (ROAE) grew to 25% up from 15.4% in spite of 26% growth in shareholders funds.

Earnings per share grew by 95% to Kshs 4.7 up from Kshs 2.4. Liquidity buffers saw cash and cash equivalent register a growth of 154% to Kshs 219.5 billion up from Ksh .86.6 billion with liquidity ratios rising to 62.4% up from 54.2% with loan to deposit ratio declining to 61.5 % down from 72.0%.

"The strong capital and liquidity ratios have positioned the Group well for continued execution of the offensive strategy particularly in light of improving asset quality and operational efficiency and an improving operating environment," sai Mwangi.

The 6 countries within which Equity operates have projected 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 fairly stable micro economic environment, making the Group well positioned to continue with its offensive and defensive strategy for resilience, agility, recovery and rapid growth.

COVID RESPONSE

The strong capital and liquidity buffers position the Group strategically for good performance going forward. The Group has intensified its shared prosperity model, rolling out a massive Covid-19 program of protecting frontline health workers in 56 county and national referral hospitals and 60 faith-based hospitals through an elaborate initiative to provide personal protective personal equipment (PPE).

This support is ongoing for a period of 3 years for county and national referral hospitals and will carry on for a period of 18 months for the faith-based hospitals that are designated Covid-19 management facilities.

This is in collaboration and partnership with the Kenya Covid-19 Fund Board. The Group has scaled its Equity Afia health franchise to 38 medical doctors and 45 health clinics and hope to record 600,000 patient visits by end of the year.

Copyright The Observer. Distributed by AllAfrica Global Media (allAfrica.com)., source News Service English

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Financials
Sales 2021 109 B 982 M 982 M
Net income 2021 33 179 M 299 M 299 M
Net Debt 2021 - - -
P/E ratio 2021 5,74x
Yield 2021 6,13%
Capitalization 188 B 1 694 M 1 697 M
Capi. / Sales 2021 1,73x
Capi. / Sales 2022 1,44x
Nbr of Employees 7 119
Free-Float 77,4%
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Number of Analysts 10
Last Close Price 49,90 KES
Average target price 52,44 KES
Spread / Average Target 5,08%
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Managers and Directors
James Njuguna Mwangi Group CEO & Non-Independent Executive Director
David Ngata Group Director-Finance
Isaac Muthure Macharia Non-Executive Chairman
Lanre Bamisebi Group Chief Information Officer
Evelyn Kamagaju Rutagwenda Independent Non-Executive Director