Equity Group (EQTY) Q4 2023 earnings summary

Executive summary

• FY 2023 total income rose 25% to KES 180.1Bn, while profit after tax fell 5% to KES 43.7Bn as funding costs, credit provisions and operating expenses increased.

• Total assets reached KES 1,821.4Bn; deposits grew 29% to KES 1,358.2Bn and net loans rose 26% to KES 887.4Bn.

• Regional banking and other non-banking subsidiaries contributed 50% of assets, 51% of revenue and 56% of profit before tax.

Financial highlights

• Net interest income increased 21% to KES 104.2Bn and non-funded income rose 30% to KES 75.9Bn; gross trade finance revenue grew 90% to KES 11Bn.

• PBT declined 13% to KES 51.9Bn and PAT fell 5% to KES 43.7Bn; EPS decreased 6% to KES 11.1.

• Total costs increased 52% to KES 128.2Bn; net loan-loss provisions rose 139% to KES 32.8Bn, while staff costs reached KES 31.8Bn and other operating expenses KES 63.6Bn.

• Shareholders’ funds rose 20% to KES 218.1Bn; borrowed funds were KES 150.6Bn, down 4% YoY.

Outlook and guidance

• FY 2024 guidance: loan and deposit growth of 15–20%; NIM 7.2–7.6%; ROE 25–30%; ROA 3.2–3.7%; NPL 9–11%.

• FY 2024 targets include cost-to-income ratio of 48–50%, cost of risk of 2.0–2.5%, non-funded income mix of 40–43%, and subsidiaries’ asset contribution of 50–55%.

• Strategy prioritizes banking, insurance, technology and trade-linked regional growth; technology is planned to become a commercial unit within 1–2 years.

• Insurance plans to enter health and general insurance in 2024; Equity Afia is rolling out in DRC.