Equity Bank 2020 net profit down 12% on high loan loss provision

 BY JOAN WANJIKU,NAIROBI,29TH MARCH,2021-Equity Bank Group will for the second year running not allocate any dividends to its shareholders  after they were   withheld  following what the bank says is  shrinking net earnings.

The lender joined other tier top commercial banks in the country to announce a drop in 2020 year results on high loan loss provision due to Covid-19 economic pressures that made it hard for borrowers to service debt.

The bank’s profit for the year ended December 2020 dropped 12 per cent to Sh20.1 billion compared to Sh22.6 billion the previous year.

Equity Bank’s loan loss provision grew five folds with restructured loans hitting Sh171 billion or 32 per cent of the total loan book.

”The impact of Covid-19 pandemic made the year 2020 an exceedingly difficult year characterized by lost jobs, unemployment, lost investments and human misery,” Equity Bank Group CEO James Mwangi said.

He added that as the bank, they drifted from the balance sheet, profits, and numbers and chose to protect customers and  staff.

Even so, the bank’s net interest income grew by 23 per cent to Sh55 billion up from Sh45billion driven by a 30 per cent growth in customer loan book and 26 per cent growth in Government securities.

The non-funded income on other hand   grew by 27 per cent from Sh30 billion to Sh38 billion.

Another Tier 1  lender NCBA Group Plc  has posted a drop profit for the year ended December 31, 2020 but maintained strong operational performance despite Covid-19 social economic disruptions.

The bank’s net profit dropped by 42 per cent to Sh4.6 billion with Non-Performing Loans rising 19 per cent to stand  at Sh40.1 billion.

This is the first time NCBA is announcing full year results as an entity following the successful merger of NIC Group PLC and CBA in October 2019.

The Group’s profit (before provisions and exceptional items) increased by 37 per cent to Sh26.8 billion.

John Gachora, NCBA Group MD said there were unprecedented challenges for  business, the banking sector and the economy at large,

Despite the massive economic impact , the firms operating income increased 38per cent to close the year at Sh46.4 billion.  To cushion the business and customers

”We implemented a robust cost containment plan that reduced operating expenses and contributed to the operating profit increase,” Gachora said.

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