Equity Bank, an East African microfinance bank based in Nairobi, Kenya, increased profits from January to September of 2009 by 48 percent (pre-tax) compared to the same period in 2008, according to comments from Dr. James Mwangi, the Chief Executive Officer of Equity Bank, that were published on The New Vision, a Ugandan online publication [1,2]. Last year, January to September pre-tax profits totaled Ksh 2.9 billion, the equivalent of over USD 38.4 million, while this year, the pre-tax profits in this period totaled Ksh4.3 billion, the equivalent of over USD 57 million [1].
There were also increases in other indicators of financial performance. Net interest income increased from Ksh4.8 billion (USD 63.6 million) in this nine-month period last year to Ksh6.7 billion (USD 88.8 million), in the same period this year [1]. This is an increase of over 40 percent [1]. Additionally, the bank’s total assets through September of 2009 are worth Ksh97.4 billion (USD 1.2 billion), up from the end of 2008 which saw assets worth Ksh76.4 billion (USD 1 billion) [1].
Mr. Mwangi attributes this performance to a “strategy of balanced growth, high operating efficiency, and prudent management of risk” [1]. Part of this included an addition of 38 branches through regional expansion in Uganda and Southern Sudan, leading to a total of 155 branches [1]. The expansion to Uganda, which occurred after the acquisition of Uganda Microfinance Ltd., was reported by Microcapital in April of 2008 [3]. This acquisition led to the creation of Equity Bank Uganda, a microfinance institution (MFI) whose performance was covered by Microcapital in October of 2009 [3,4,5].
Equity Bank was founded in 1984 [2]. It accounts for 52 percent of bank accounts in Kenya with over 4.1 million accounts [2]. It provides loans, savings, and fund transfer services [6]. It is funded through its savings deposits and shareholder capital [6]. According to its latest financial results, as of September 30, 2009, Equity Bank has customer deposits totaling over USD 869.5 million [7]. According the MIX Market, the microfinance information clearinghouse, the bank has a gross loan portfolio of over USD 535.8 million [6]. As of December 31, 2008, the bank has a return on assets of 5.91 percent, a return on equity of 22.16 percent, and a debt to equity ratio of 2.92 [6]
By Christopher Maggio, Research Assistant
Bibliography
[1] New Vision article entitled ‘Equity Bank pre-tax profits grow by 48%’ : http://www.newvision.co.ug/D/8/220/699916
[2] Equity Bank: http://www.equitybank.co.ke/
[3] MICROCAPITAL STORY: Equity Bank of Kenya to Acquire Microfinance Institution (MFI) Uganda Microfinance in $26.9m Deal: https://www.microcapital.org/microcapital-story-equity-bank-of-kenya-to-acquire-microfinance-institution-mfi-uganda-microfinance-in-269m-deal/
[4] Equity Bank Uganda on the MIX Market: http://www.mixmarket.org/mfi/uml
[5] MICROCAPITAL.ORG STORY: Daily Monitor of Uganda Reports on Progress of Equity Bank Uganda, Bank Formed After Acquisition by Equity Bank of Kenya: https://www.microcapital.org/microcapitalorg-story-daily-monitor-of-uganda-reports-on-progress-of-equity-bank-uganda-bank-formed-after-acquisition-by-equity-bank-of-kenya/
[6] Equity Bank on the MIX Market: http://www.mixmarket.org/mfi/equity-bank
[7] Equity Bank financial results as of September 30, 2009: http://www.equitybank.co.ke/UserFiles/File/EQUITY%20GROUP%2030TH%20SEPT%202009%20Financial%20Results.pdf
Conversions performed using Bloomberg Currency Converter: http://www.bloomberg.com/invest/calculators/currency.html
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