Maximizing Value for Stakeholders

In the third quarter, Equity Bank’s profit shot up by 120 per cent from Ksh. 351 million in September 2005 to Ksh. 774 million in September 2006.

Profitability for the year to September has been attributed to growth in business. Equity’s operating income grew from Ksh.1.2 billion to close at Ksh. 2.3 billion as customer deposits increased from Ksh. 7.6 billion to Ksh. 13.6 billion.

The Banks has seen tremendous growth in non-interest income which doubled as a result of increased volumes and productivity. This was achieved despite a review in some of the tariffs, specifically, the cheque clearing charges and minimum operating balances both of which were zero-rated.

Automated Teller Machines (ATM) card applications and transaction fees made positive impact. Interest income rose 75 per cent from Ksh. 576 million to top Ksh. 963 million driven both by the increase in the volume and the quality of the loan book. This was achieved despite growth in gross loans and advances by up to 102 per cent.

Total operating expenses for the nine months increased by 76 per cent to close at Ksh. 1.5 billion from Ksh. 860 million recorded last year. The increase is consistent with the growth in the bank’s establishment costs as management implements business expansion plan including branch rollouts, new products and staff increase to match anticipated service delivery requirements.

Loans and advances grew by 102 per cent to Ksh. 9.7 billion up from Ksh. 4.5 billion but within three months from June when the non-performing loans stood at Ksh. 970 million, the figure dropped marginally to Ksh. 690 million signifying efforts at recovery.

The loans to deposit ratio increased from 64 per cent to 72 per cent, thanks to the efficiency of funds allocation thus the tremendous growth in interest income.