Equity Group Holdings has proposed a record dividend of Kshs 15.1 billion for the second year running, equivalent to sh.4.00 dividends out of Kshs 11.10 earnings per share.
The group registered Kshs 43.7 billion in profit after tax during the Financial Year 2023, driven by net interest income growth by 21% to Kshs.104.2 billion up from Kshs.86 billion while non-funded income registered an impressive 30% growth to Kshs.75.9 billion up from Kshs 58.3 billion.
While releasing the 2023 full-year financial results, Dr. James Mwangi, Group Managing Director and CEO said, “The Kshs. 4 per share dividend amounts to a 36% payout of the Kshs. 43.7 billion profit after tax, or Kshs 11.1 earnings per share, and a dividend yield of 11.9% on the 2023 year-end closing share price of Kshs. 33.65, or 800% on par value.”
Gross trade finance revenue grew by 90% to Kshs.11 billion from Kshs 5.8 billion, driven by a 106% growth in trade finance-related lending and a 26% growth in trade finance guarantees and off-balance sheet items. Total costs grew by 52% to Kshs.128.2 billion up from Kshs 84.5 principally driven by a 139% growth in loan loss provision of Kshs 32.8 billion up from Kshs 13.7 billion to strengthen asset quality buffers.
Other operating expenses and staff costs grew by 39% and 28%, respectively, driven by high inflation and the depreciation of the Kenyan shilling. The return on average equity stood at 22.3% against an 18% cost of capital. Profit after tax declined by 5% to Ksh 43.7 billion, down from Ksh 46.1 billion, as a result of interest expense growing at 53% compared to 30% growth rate of interest income.
The gross balance sheet grew by 26% to Kshs.1.821 trillion up from Kshs 1.447 trillion, driven by 29% growth in customer deposits to Kshs 1.358 trillion from Kshs 1.052 trillion. Shareholders’ funds grew by 20% to Kshs 218.1 billion, up from Kshs 182.2 billion. Deployment of funding saw net loans grow by 26% to Kshs.887.4 billion, up from Kshs. 706.6 billion, while government securities holdings grew by 27% to Kshs.500.5 billion up from Kshs.394 billion as cash and cash equivalent grew by 25% to Kshs 290.1 billion, up from Kshs 232.4 billion.
Total assets have grown to Kshs.1.822 trillion up from Kshs.428.1 billion as shareholders’ funds grew to Kshs.218.1 billion, up from Kshs. 72.1 billion.
The group registered a PAR of 11.7%, a slight improvement from 12.2% at the end of the 3rd quarter and favourably compared with 14.8% industry NPLs.
“The NPL trend is consistent with management’s view, as at the investor’s 3rd quarter briefing that NPL had peaked. A prudent risk management culture led the board to approve a proactive derisking of future performance by providing for the lifetime expected loss on outstanding NPLs and increasing loan loss provision by 139% to Kshs. 32.8 from Kshs. 13.7 billion, driving the cost of risk to 4.4% while increasing NPL coverage to 67.3% without guarantees and 90% with guarantees,” Dr. Mwangi pointed out.
Equity also emerged as a regional financial services leader, with 50% of assets, 51% of revenue, and 56% of profit before tax being contributed by regional banking subsidiaries.
“With clarity of the Africa Recovery and Resilience Plan, strong leadership and human capital, strategic positioning in one of the world’s fastest-growing regions, a diversified business model across banking, insurance, health, philanthropy, technology and its execution, risk management capabilities, resilience, and strong buffers, Equity is uniquely positioned to deliver on a positive and promising focus to all its stakeholders,” Dr. Mwangi added.
