Equity Group’s subsidiaries increased their total revenue contribution to the Group’s revenue to 30 per cent up from 28 per cent the previous year, while raising their contribution of profit before tax to 26 per cent of the Group’s profit up from 17 per cent.
The Group noted that regional and diversification subsidiaries continued to register impressive results with a return on equity of 18.7 per cent against the Kenyan banking subsidiary return on equity of 21.6 per cent.
Equity’s business model of high-volume low margins with non-funded income contributing 42 per cent of total income and a low cost of funding of 2.8 per cent enables it to reduce exposure to COVID-19 shocks. It also allows the Group to ride a compression of margin in interest earning assets.
The Group’s total income grew by 13 per cent to sh19.7 billion up from sh17.5 billion for the same period last year.
Non-funded income grew by 16 per cent outpacing the 11 per cent growth on net interest income thereby increasing its contribution to 42 per cent of the Group’s total income.
Forex trading income grew by 34 per cent to sh1.1 billion up from sh815 million with 26.5 per cent of the volume traded contributed by diaspora flows.
The bank said that diaspora remittances commissions grew by 22 per cent to sh234 million up from sh192 million the previous year with the volume of diaspora remittances growing by 31 per cent to reach sh40.6 billion up from sh30.9 billion the previous year.
Merchant banking commission grew by 11 per cent to sh582 million up from sh523 million the previous year with Merchant banking volume reaching sh29 billion up from sh25.6 billion.
“The brick and mortar infrastructure of branches and ATMs processed only 6 per cent of the Group’s banking transactions, while mobile and internet banking processed 79 per cent of all transactions, with agents and merchants processing 15 per cent of transactions making the Group an increasingly virtual digital financial service provider”, read the statement from the Group.
It’s liquid balance sheet with cash and cash equivalents constitutes 38 per cent of total assets and long-term funding of shareholders’ funds and long-term debts constituting 23 per cent of the total assets. This places the Group in a strong strategic position to respond to and adeptly handle challenges associated with a rapidly changing and uncertain environment.
“A strong capital and liquidity position give us the strength and capacity to cushion our business against external shocks and accommodate and walk with our customers during these challenging times,” said Dr. James Mwangi.