Despite facing a five percent decline in profit after tax, Equity Group has upheld its track record of dividend payout for the year ending December 2023. The bank’s board has recommended a dividend payout of Sh15.1 billion, marking an increase in dividend yield to 11.9 percent from 8.8 percent in the previous year.
James Mwangi, CEO of Equity Group, announced that shareholders would receive Sh4 per share, compared to Sh4 per unit the previous year. This dividend amounts to 36 percent of the total net profit, showcasing the bank’s commitment to delivering value to its shareholders.
The bank reported a net profit of Sh43.7 billion for the period under review, representing a five percent decline from the previous year’s record of Sh46.1 billion. This decline was attributed to the strategic decision to maintain the loan interest charge at 13 percent, despite receiving approval from the Central Bank of Kenya (CBK) for a risk-based pricing rate that would have increased the cost of borrowing to about 24 percent.
Mwangi emphasized the bank’s focus on prudent provision and its efforts to cushion consumers against economic challenges, including currency depreciation and geopolitical tensions. Despite these challenges, Equity Bank demonstrated strong momentum, with net interest income growing by 21 percent to Sh104.2 billion and non-funded income registering a 30 percent growth to Sh75.9 billion.
The bank’s total costs increased by 52 percent to Sh128.2 billion, primarily driven by a growth in loan loss provision, which grew by 139 percent to Sh32.8 billion. Other operating expenses and staff costs also saw significant growth, reflecting high inflation and the depreciation of the Kenya shilling.
However, Equity Bank witnessed an increase in its customer base, with customer numbers growing to 19.6 million. This resulted in a rise in customer deposits to Sh1.4 trillion from Sh1.1 trillion the previous year, and the loan book increased to Sh887.4 billion from Sh706.6 billion.
Despite the challenges posed by rising loan defaults, Equity Bank remains committed to delivering value to its shareholders and serving its customers across East Africa. The bank’s resilience and strategic focus position it well for continued growth and success in the future.
