Equity Group’s net profit for the half year ended June grew 7.8 percent to Sh26.3 billion on increased interest and non-interest income.
Net interest income grew by 16.6 percent to Sh46.4 billion on increased lending while non-interest income rose by 42.9 percent to Sh36.5 billion.
Equity Group CEO James Mwangi said on Tuesday the lender expanded its loan book by 25.6 percent to Sh817.19 billion despite rising loan defaults as businesses and households grapple with economic challenges.
“We want to support businesses, communities and entrepreneurs to wade through these difficult and challenging times. You don’t avoid risk. You manage risk,” said Mr Mwangi.
The rise in interest income was partly due to the rise in the base lending rate as the Central Bank of Kenya sought to contain high inflation.
“When the government increases interest rates or issues three-year bonds at 16 percent or 17 percent, it means that we can’t undermine the sovereign risk rate by issuing interest rates lower than that,” said Mr Mwangi.
The group also benefited from foreign exchange trading whose revenue rose from Sh5.03 billion to Sh8.45 billion in the period many businesses were seeking dollars to facilitate imports.
“As the country goes through the challenges of forex, the group has been supported heavily by diaspora flows that have enabled us to keep the lights of businesses of our customers on, providing them foreign currency as they required and we can see the growth in forex trading income as a result,” said Mr Mwangi.
Mr Mwangi said funding grew at a faster pace than that of lending, leaving room to invest in government securities, resulting in a growth in income from this line of business from Sh19.1 billion to Sh22.7 billion.
Equity’s non-performing loans (NPLs) ratio hit 9.8 percent from 8.5 percent, to which it reacted by increasing provisioning for loan defaults by 73.6 percent to Sh7.1 billion.
