It is phenomenal growth for Equity Bank
EquityBank bounced back to its reputed impressive growth rate by announcing a Kshs 9 billion profit before tax for the year 2010. The Kshs9 billion profits reflect a growth rate of 71%, up from Kshs 5 billion posted the previous year.
Speaking when he released the results, Equity Bank Group Chief Executive and Managing Director, Dr James Mwangi attributed the Bank’s impressive results to the massive growth in number of customers by 1.5 million and a growth of 50% on customer deposits. The number of customers grew from 4.4 million in 2009 to 5.9 million as at December 2010 while customer deposits grew from Kshs 69.8 billion in 2009 to Kshs 104.4 billion in 2010.
“At Equity Bank we have indeed been humbled by the support extended to us by the increasing number of our members. We owe our success to the community which has made us their preferred financial partner,” said Dr Mwangi.
“It is in appreciation of the massive support from Kenyans that we are responding by engaging in heavy investment in social and economic development initiatives.” Efforts by the Bank to engage in sustainable social investment programmes such as the recently launched Kshs 4 billion Wings To Fly Scholarships and Leadership Mentoring Program in addition to the Kshs 1 .1 billion financial literacy program targeting 619,500 women and youth have significantly enhanced the Bank’s brand. Last week Equity Bank was named by Interbrand Sampson as Kenya’s most preferred & trusted bank by customers.
Equity’s banking model has focused on affordability, ease of access, relevant products and customer experience. Last year Equity was named Kenya’s top brand by Synovate.
“We harnessed the growth in customer numbers using our robust, high availability level 4 data center. The growth in deposits coupled with a strengthened treasury and trade finance department resulted in growth of investments in government securities and cash & bank deposits by 165% and 42% respectively and attendant interest income growth of 85% and commission income & fees by 440%,” said Dr Mwangi.
Growth in lending buoyed by the growth in deposits resulted in a growth of 28% in interest income up from 10.8 billion in 2009 to Kshs 13.8 billion in 2010. Total operating income for the period grew by 41% from Kshs 15.7 billion in 2009 to Kshs 22.2 billion in 2010. Total operating expenses on the other hand grew by 26% from Kshs 10.5 billion to Kshs 13.2 billion in 2010.
Dr James Mwangi further attributed the impressive performance to improved efficiency as reflected by improved cost to income ratio which decreased from 67% to 60% while the same ratio decreased from 60% to 51% net of provisions and a slower growth rate of expenses of only 26%. Gross non performing loans declined by 18% from Kshs 5.33 billion in 2009 to Kshs 4.4 billion in 2010 while asset quality improved to 3.7% in 2010 from 4.7% in 2009.
Operations from new lines of business have gone well with Southern Sudan operations contributing a profit of Kshs 349 million in their first full year of operations. Equity Insurance Agency contributed Kshs 67 million while the custodial business generated income of Kshs 155 million. Equity Uganda operations stabilized after massive rebranding, branch expansion and capacity building.
For the shareholders, 2010 was an excellent year. Profit after tax grew by 69% to Kshs 7.2 billion up from Kshs 4.2 billion in 2010. Proposed divided doubled to Kshs 3 billion up from Kshs 1.5 billion in 2009.
Earnings per share increased by 69% to Kshs 1.93 up from Kshs 1.14 in 2009. Return on Equity increased by 43% to 28.5 % in 2010 up from 20% while return on assets grew by 23% to 5.8% up from 4.7 %.
Equity Bank’s past strategy of branch growth to increase outreach and massive investment in technology resulting in greater efficiency have paid odd as was the case of diversification of business lines and products.
The Bank continues to focus on alignment to customer needs, business model and innovation such as the convergence with telecoms. Innovative products such as M-Kesho, Orange Money and Yu-Cash together with introduction of agency banking will continue to generate and drive value while at the same time providing convenience and accessibility for the customer.
This article was originally posted on Africa Banking Network