Business & Money
Equity Group Holdings Shows Strong Recovery with 25% Profit Growth in Q1 2024
Driving the bank’s recovery is a bold move to optimize financial performance. Equity Group focused on boosting deposits, achieving an 11% increase, while strategically cutting back on costly deposit placements. Simultaneously, the bank reduced long-term borrowed funds by 21% through retiring high-cost dollar-denominated loans, significantly enhancing cost efficiency.
: Equity Group Holdings Surges Ahead in Q1 2024 with Resilience and Strategic Agility, Setting the Pace in East Africa’s Financial Services Sector
By Charles Wachira
Equity Group Holdings has bounced back impressively in the first quarter of 2024, reporting a 25% increase in profit after tax to Kshs 16 billion (US$123,851,392) compared to last year. This turnaround follows a recent 5% decline in earnings for the year ending December 31, 2023. The resurgence can be attributed to decisive leadership and a strategic approach to managing its balance sheet.
Strategic Decisions Driving Growth
Underpinning the bank’s recovery is a bold decision to optimise its financial performance. Equity Group prioritised deposit growth, achieving an 11% increase while strategically reducing expensive deposit placements. Concurrently, the bank managed a 21% decline in long-term borrowed funds by retiring high-cost dollar-denominated loans, improving overall cost efficiencies.
Enhanced Risk Management and Loan Portfolio Growth
Equity Group strengthened its credit risk underwriting to mitigate elevated credit risks amidst a challenging economic environment, resulting in a moderate 3% year-on-year growth in the loan book as of March 31, 2024. Notably, the bank shifted focus from private-sector lending to government securities, comprising 21% of its lending portfolio. This strategic pivot contributed to a reduced cost of credit risk, declining to 2.9% from 4.4% in December 2023.
Financial Performance and Operational Efficiency
Equity Group’s disciplined cost management strategies led to a notable improvement in operational efficiency. Total costs grew by 28% in the first quarter of 2024, a significant reduction from the 52% growth observed in the previous year. This efficiency drive resulted in a lowered cost-to-income ratio of 47.1% compared to 52.3% in December 2023.
Strategic Expansion and Market Positioning
Equity Group maintained a robust 52.1% liquidity position despite fluctuations in the world economy, bolstered by a balance sheet totalling Kshs 1.69 trillion (US$13,081,803,280).
In addition, the bank has a strong liability franchise, supported by 20 million deposit customers and diverse funding sources. This remains a cornerstone of its operational resilience and growth strategy.
Future Outlook and Strategic Focus
Equity Group remains committed to navigating macroeconomic uncertainties and leveraging its regional footprint to drive sustainable growth. The bank’s emphasis on digital innovation, customer-centricity, and expanding its non-funded income streams positions it well to capitalise on emerging opportunities in financial services across East Africa.
In conclusion, Equity Group Holdings’ strong performance in Q1 2024 reflects its adaptive resilience and strategic agility in a volatile economic landscape. With a solid foundation of strong governance, robust risk management practices, and a diversified business model, the Group is poised to sustain momentum and deliver value to its stakeholders in the evolving financial services sector.
Keywords:Equity Group Q1 2024 Profit Growth:Strategic Financial Optimization at Equity Group:Loan Portfolio and Risk Management Strategy:Operational Efficiency and Cost Reduction:Future Outlook and Market Positioning in East Africa