Equity Group announces record profits for 2021

Equity Group has marked a major milestone with a remarkable 99% growth in Profit After Tax, totaling 40.1 billion Kenyan shillings for the year ending December 31st. In a recent interview with CNBC Africa, Group CEO James Mwangi delved into the key factors that propelled the company to achieve such outstanding financial results. One of the primary drivers behind this record profit was the strategic approach adopted by the bank over the past two years. Mwangi highlighted the dual strategy of defensive risk management and aggressive growth, which ultimately paid off significantly. The bank experienced a reduction in credit risk and normalized cost of credit, leading to improved profitability. Additionally, an emphasis on investment growth, particularly in government securities, bolstered the bank's interest income, contributing to its overall success. Mwangi elaborated on the bank's robust recovery from COVID-19 challenges, citing a proactive approach to loan provisions as a key factor in their financial performance. The bank's ability to effectively recover on loan provisions helped strengthen its financial position and decrease non-performing loans. Looking ahead, Mwangi expressed confidence in the bank's ability to further reduce NPLs and meet ambitious targets for the coming year. In light of the record profits, Equity Group declared a dividend of 9.4 billion Kenyan shillings, signaling good returns for shareholders. Mwangi reassured investors that the bank would focus on internal capital generation and adhere to its dividend payout policy, providing stability and growth opportunities for shareholders. He also outlined plans to reduce NPLs from 44 billion to 30 billion by the end of 2022, demonstrating the bank's commitment to strong financial management and risk mitigation. As the Democratic Republic of Congo (DRC) prepares to join the East African Community, Mwangi expressed optimism about the potential economic benefits for the region. The harmonization of policies and regulations within the EAC is expected to create new opportunities for trade and investment, particularly in the financial sector. Equity Group's early engagement in the DRC market positions the bank to leverage its expertise and resources for growth and expansion. Furthermore, Equity Group's foray into the insurance sector through its subsidiary signals a new growth trajectory for the company. With a target market of 16.5 million customers, the insurance subsidiary aims to capitalize on cross-selling opportunities and build on the bank's reputation for trust and reliability. By offering innovative insurance products to its existing customer base, Equity Group anticipates rapid growth in the insurance industry. Looking ahead to the upcoming Kenyan election year, Mwangi expressed confidence in the country's economic prospects. Despite the challenges posed by the COVID-19 pandemic, Mwangi cited projections of 6.1% GDP growth for Kenya in the current year. He emphasized the resilience and entrepreneurial spirit of Kenyans, noting that the private sector plays a crucial role in driving the country's economic growth. While acknowledging the potential impact of political stability on investor confidence, Mwangi remained optimistic about Kenya's economic outlook and the resilience of its private sector.