The operating environment in banking sector in Kenya last year took a lot of hits that saw challenges like three commercial banks being put under statutory management, foreign rate exchange instability, global commodity price, rising inflation among others putting the banking economy at an uncertain slowdown. On the upside, many banks took up the trend of moving away from traditional banking methods to a more digital way of banking in order to broaden their access to customers despite the turbulent environment.
This was the case seen as Equity Bank released their 2016 financials that documented a significant amount of growth despite the challenging operating environment. The Group Managing Director and CEO, Dr. James Mwangi owes it to a differentiated strategy that focused on less risky government securities such as the digitization of products and services like Eazzy App & Equitel and the expansive growth of the SME sector as opposed to higher risk loans in sectors like agriculture which have taken a hit with the recent prolonged drought.
Dr. Mwangi also stated that innovation has remained a key focus for the Equity Group whose resilient business model fortified its liquidity position to close at over 48% and a capital adequacy ratio of over 19%. He stated that the bank created three directories to enhance focus on credit, the SME sector and corporate & retail that put the bank as one of the preferred centers for relationship banking for SMEs and corporates which in turn translated to improved efficacy and cost saving tendencies.
Regional expansion to five countries in Eastern Africa has also enabled the bank weather out the storm and enabled the bank to cushion itself against challenges from the operating environment that may arise from any of the markets. Despite the fact that the pending 2017 elections in Kenya and Rwanda have played a role in slowing down economic activities with investors exercising caution, the Group’s regional expansion and diversification strategy has maintained a growth momentum with subsidiaries in Rwanda, DRC and Tanzania registering growth in deposits of 34%, 29% and 23% respectively
Some other key highlights of the bank’s results include:
- The deposits of the bank grew by 11% from Kshs 303 billion to Kshs 337 billion as at 31st December supported by a growth in number of customers by 11% from 10,039,620 to 11,129,016.
- The group’s profit before tax grew to Kshs 24.9 billion with the regional subsidiaries contributing Kshs 1.4 billion accounting for 5% of the Group’s profit before tax.
- The increased adoption of the new delivery channels of mobile banking under Equitel and Eazzy Banking as well as Agency banking saw the number of transactions grow from 200 million to 335 million transactions.
- The uptake of Equitel in the period under review increased from 1.6 million customers to 2.7 million while the downloads of the Eazzy Banking App rolled out late last year was at 130,266 downloads with over 10 million transactions – up from 5.5 million transactions – valued at Kshs 6.8 billion as at 31st December 2016.
- The number of Equity Agents increased from 23,885 to 29,561 in the same period.
- The SME sector loan book grew by 10% with the total loan book at the end of the year closing at Kshs 266billion.
- Equitel did a number of 227 million transactions, with Agents doing 62 million transactions, ATMs at 24.8 million transactions and the branches doing 20.4 million transactions.
- The Equity PayPal withdraw service contributed to 27% of income from the money transfer solutions ahead of MoneyGram (18%) and coming second to Western Union, which accounted for 47% of all international money transfers.
- The Group’s value proposition to shareholders continues to pay off with an Earning per Share (EPS) of Kshs 4.38. As a result of this, the Group’s board proposed a dividend payment totaling Kshs 7.547 billion.