Equity Bank regional units profit share jumps 65 per cent in Q1
Equity Bank #ticker:EQTY subsidiaries accounted for a fifth of the lender’s profits as its diversification plan starts to bear fruit.
The bank, which also operates in Uganda, Tanzania, Rwanda, South Sudan and the Democratic Republic of Congo, saw profits from the subsidiaries grow 65 per cent to Sh1.5 billion in the three months to March.
This accounted for 19 per cent of the Sh7 billion the bank posted in quarter one, up from 14 per cent in similar quarter a year earlier.
The bank has been aggressive in the foreign markets over the past year to ease effects of interest rate cap imposed on commercial banks in September 2016.
Besides growing its transaction incomes, Equity turned to the subsidiaries to cut reliance on the Kenyan market.
“One of the focus areas in the Group’s post rate cap business model is on extracting more revenue from its subsidiaries,” said analysts at the Standard Investment Bank.
Equity latest subsidiary in DR Congo generated the bulk of the foreign units’ profits at Sh380 million, which was a 78 per cent growth from a similar quarter a year earlier.
Tanzania grew 68 per cent to Sh200 million while Uganda was up 28 per cent to Sh330 million.
The bank plans to aggressively grow its loan books outside Kenya and increase the subsidiaries share of profits to 40 per cent within the next four years.
“The subsidiaries have huge headroom for growth because they are young and the markets have great opportunity than Kenya,” said Equity Group chief executive officer James Mwangi (left).