Equity Bank has for the first time in 10 years recorded a decrease in profit after tax in its 2016 Financial Year results (2016FY) .
The profit dropped by 4% to stand at 15.2 billion
Adressing investors at the release of the 2016FY, Equity Group Managing Director and CEO James Mwangi attributed the decrease to a number of factors not limited to; effects of interest capping regulation at no more than 400 basis points above CBR for loans and not less than 70% of CBR on interest earning deposits, credit to private sector contraction, bear run on the Stock markets and liquidity amongst banks and heightened uncertainty following three commercial banks being put under statutory management.
On the regional front, Mwangi noted that the environment was characterized by uncertainties due to the electioneering in Tanzania and Uganda, the transitions in South Sudan and DRC. In addition, the pending 2017 elections in Kenya and Rwanda played a role in slowing economic activities as investors’ exercised caution in their investment decisions.
The year also witnessed a slump in global commodities prices leading to a slowdown in regional trades and economic growth. The impact of the slow down effect of the China economy which has affected global commodity prices and political events in The US and UK are also being felt.
The macro- economic environment was also characterized by foreign exchange rate instability, rising inflation, devastating drought resulting in famine, food inflation and negative impact on water supply, hydro energy and security.
Despite the drop, the Group’s pretax grew to KShs 24.9bn from KShs 24.0 bn with the regional subsidiaries contributing KShs 1.4 bn accounting for 5% of the Group profit before tax.
Dr.Mwangi, in his keynote speech ,expressed the banks resilience and ability to weather shocks from the environment as reflected in the Group’s liquidity and well capitalized balance sheet.
The Group closed the year with liquidity levels of over 48% and total capital adequacy ratio of over 19%.
“Our value proposition to shareholders is solid and our strategy continues to pay off with an Earning Per Share (EPS) of KShs 4.38. As a result of this, the Board has proposed a dividend payment totaling KShs. 7.547bn.” he added