Equity proposes Sh11.32b dividend as profit doubles to Sh40b

Equity Group Managing Director and CEO Dr James Mwangi with Group Director Strategy, Strategic Partnerships and Investor Relations, Brent Malahay during the launch of the Sh678 billion Africa Recovery and Resilience Plan. [Wilberforce Okwiri, Standard]

Equity Group's net profit for the year ended December 2021 has doubled from Sh20.09 billion to Sh40.07 billion on the back of increased income and reduced operating expenses.

The lender cut provisioning for loan defaults by 81 per cent or Sh20.79 billion to Sh5.84 billion compared to Sh26.63 billion for the previous year, citing declining defaults among borrowers.

The earnings growth means Equity Group has for the second year running retained its spot as the most profitable lender in the market, with KCB Group's net profit in the same period being Sh34.2 billion.

Equity has on the back of increased earnings declared a dividend of Sh3 per share, making the return to cash distributions to shareholders after freezing for the past two years to preserve capital in Covid-19 environment.

The dividend payout will amount to Sh11.32 billion coming as a relief to shareholders who last received dividends on the 2018 performance.

The dividend will be paid on or before the end of June to the members in the share register of the company on the closure of May 20.

Equity had withheld dividends for the 2019 results after the Covid-19 pandemic struck mid-March 2020 when it was just preparing for its annual general meeting, setting it into a cash-preservation mode.

“The shareholders paid the price for two consecutive years foregoing dividends to backstop the risk of uncertainty and enable the Group to enhance its capital buffers,” said Mr Mwangi.

The latest payout is a 50 per cent jump from the Sh7.55 billion that Equity paid its shareholders in 2019 for the 2018 performance.

Net interest income grew by 25 per cent to Sh68.8 billion in line with a 23 per cent growth in the loan book to Sh587.8 billion.

Investment in government securities also rose 81 per cent to Sh394.1 billion, adding to the interest income.

Non-interest income grew by 15 per cent to Sh43.6 billion mainly driven by trade finance, payment channels and foreign exchange trading income.

Operating costs declined 16 per cent from Sh71.9 billion to Sh60.5 billion as the lender cut provisioning for loan defaults by 81 per cent

The lender said portfolio at risk declined to 8.3 per cent down from 11 per cent in the previous year as non-performing loans declined to Sh44.5 billion from Sh50.6 billion.