Equity Bank's first quarter profit drops to Sh4.8billion
Equity Bank Group CEO James Mwangi attributed the fall in profit to a tough operating environment.
Equity’s net profit for the three months to March stood at Sh4.83 billion, compared with Sh5.13 billion the same period last year.
During the same period, pretax profit also fell by 5 percent (Sh13.1billion) to Sh6.9 billion ($66.87 million) from 7.3 billion a year earlier.
Equity Bank Group CEO James Mwangi attributed the fall in profit to a tough operating environment, citing the rate caps on customer loans.
“A cautious approach in credit underwriting because of inability to price risk saw the loan book decline by 5 per cent from Sh275 billion to Sh262 billion,” Mr Mwangi said at an investor briefing on Thursday.
Equity’s net interest income from customer loans shrunk by 37.1per cent to Sh8.1 billion in the same period.
Equity joins other lenders that are counting losses after the introduction of capping of interest rates.
On Wednesday the bank announced it had closed seven out of its 12 branches in South Sudan due to continuous losses which run to the tune of Sh528 million before tax.
Mr. Mwangi said the bank will now divert more funds to purchasing treasury bills going forward as it considers government debt less risky and more profitable in the wake of the rate capping law.
During the quarter, Equity Bank purchase of government debt rose by 56.7 per cent to Sh2.96 billion.
Other loss mitigating measures the bank has adopted is digital banking which has cushioned the bank from more losses, the group CEO added.
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