Equity bank to pay record dividend after Sh46.5 billion profit surge

From L-R: Equity Group Chairman, Prof. Isaac Macharia, Equity Group Managing Director and CEO, Dr. James Mwangi and Equity Group Foundation Director Operations, Dr. Joanne Korir during the Full Year 2024 Investor Briefing event. [Wilberforce Okwiri,Standard]

Equity Group has increased its dividend payout to a new record, rewarding shareholders with a larger return following a significant profit recovery.

The move signals confidence in the bank's financial resurgence after a year of improved performance, reversing a previous yearly earnings decline.

In the financial results for the year ending 31 December 2024, released yesterday, the bank increased its cash distribution by 6.25 per cent to Sh16 billion or Sh4.25 per share-its highest ever-up from Sh4 per share a year earlier.

This came as Kenya's largest bank by customer base reported a 10.9 per cent jump in net earnings, posting Sh46.54 billion for the full year ended 31 December, compared to Sh41.97 billion in the same period last year.

The group's profit before tax grew by 17 per cent to Sh60.7 billion, while earnings per share rose by 11 per cent to Sh12.3.

The increased dividend is a boon for shareholders seeking consistent returns, particularly income-focused investors reliant on dividends amid a challenging economic climate.

Norwegian Investment Fund-backed Arise B.V. will be the largest beneficiary of the generous cash distribution, receiving Sh2.04 billion, reflecting its 12.76 per cent stake.

Equity Group Chief Executive James Mwangi will receive Sh542.4 million through his 3.39 per cent shareholding, while other shareholders, holding 62.8 per cent, will share the remainder.

Equity's growth strategy and regional expansion

Equity Group's decision to raise the dividend, representing a 34.5 per cent payout ratio, underscores its commitment to shareholder value.

The performance comes on the back of a six per cent rise in total income to Sh193.8 billion.

"We are proud of the resilience demonstrated by the Group amidst a challenging global economic landscape," said Mwangi at an investor briefing in Nairobi yesterday.

"Our financial strength gives us the flexibility to seize opportunities as the regional economy presents diversified levers for growth."

The group's regional expansion and product diversification strategy continues to drive growth, with subsidiaries contributing 49 per cent of total assets, 48 per cent of total loans, and 54 per cent of profit before tax.

Notably, Equity Bank Rwanda's revenue grew by 36 per cent, Tanzania by 20 per cent, and DRC by nine per cent year-on-year. Profit after tax for Rwanda grew by 30 per cent, Tanzania by 107 per cent, Uganda by 186 per cent, and DRC by 29 per cent.

The group's total deposits reached Sh1.4 trillion, with a customer base of 21.6 million.

Equity has also diversified into insurance, issuing 14.1 million policies in the past three years, with 5.9 million unique customers, Mwangi said.

Mwangi highlighted the successful diversification efforts, emphasising the growing contribution from regional operations. Equity's life assurance business grew its profit before tax by 58 per cent to Sh1.5 billion from Sh934 million in 2023.

The bank recently acquired a general insurance licence, in addition to its life assurance business, giving it the ability to offer a comprehensive suite of insurance solutions.

"As we continue to expand our financial services ecosystem, our Bancassurance unit remains a vital component of our growth strategy. The six per cent increase in premium collections, despite the current market challenges, underscores the unit's potential," Mwangi said.

"Our insurance premium financing solution has seen a significant 50 per cent increase in uptake, reflecting our dedication to supporting customers through uncertain times as they prioritise protecting their health, life, and assets."

The lender's performance caps a strong year for Kenyan banks, which have reported substantial earnings despite a challenging economic environment.