Equity profits drop 14% on High Loan Provision

Equity Bank Group’s net profit has shrunk by 14% for nine months to September 2020. The third-quarter results show the bank’s profit after tax dropped to Sh15 billion from Sh17.5 billion in last year’s third quarter.

Loan loss risk provisions grew 11-fold from Sh1.3 billion to Sh14.3 billion increasing non-performing loan coverage to 86%. This was due to the anticipation of defaults caused by reduced earning among borrowers.

This year’s third quarter saw non-performing loans grew to Sh45.9bilion from Sh26.5 billion in last year’s, a 73.2% increase.

Shareholders’ returns reduced from 22.9% to 16.9% and return on average assets from 37% to 2.5%.

Equity Bank Group Managing Director James Mwangi says the bank continues to demonstrate high resilience in the face of the COVID-19 pandemic.

“We grew our loan book by 30% year on year in order to support our customers who saw opportunities of green shoots and diversification in the COVID-19 environment,” said Mwangi.

Moreover, equity maintained its position as the second-largest bank in the country in terms of asset value.

Mwangi said that regional expansion and business diversification efforts have reduced dependence on Kenya for Group performance making the Group truly a regional financial services provider.