Equity Bank sees huge profit jump
07 May 2013, 08:43
Nairobi - Equity Bank of Kenya expects pretax profits soar in 2013 by up to 30 percent and is hopeful Ethiopia will soon seal membership of the World Trade Organisation and open up a large new market.
Reporting a 21 percent rise in profits in the first quarter, Chief Executive James Mwangi cited the peaceful end to a legal standoff around Kenya's March presidential elections as well as falling operating costs as reasons for the improvement.
The outcome of this year's elections contrasted to post-election violence in 2007 that crippled east Africa's biggest economy. That has lifted business confidence, benefitting the bank, which is Kenya and the region's largest by number of accounts.
"We expect an improvement above last year's growth possibly bouncing towards 30 percent (for) profit before tax," Mwangi told Reuters after presenting the bank's first quarter results.
Pretax profit in the first quarter was 4.5 billion shillings ($53.8 million), up 21 percent on the year and compared to 17.42 billion shillings over the whole of 2012.
Investors driven out of troubled banks in the developed world are showing an interest in lenders in the country of 40 million, also drawn by burgeoning investment in oil, gas and other resources across the region.
Mwangi said East Africa as a whole should grow by a minimum of 7 percent per year in the foreseeable future, driven by growth across a range of sectors.
Net interest income at the bank also jumped 21 percent on the year to 6.87 billion shillings while the cost-to-income ratio dropped to 49.9 percent from 50.9 percent in the same period a year ago. Mwangi said he expected the ratio to drop below 48 percent by the end of this year.
Equity, which operates in Uganda, Tanzania, Rwanda and South Sudan, is seeking to invest further in Ethiopia where it has already been granted a licence to open a representative office, Mwangi said. But he said the bank was only interested in opening branches.
"Given our business model, a representative office can't do so we are waiting for them to open the market," the chief executive said.
"We are optimistic. There is talk of them signing the World Trade Organization agreement and if they do that it means the market opens."
He said Ethiopia was an attractive market because it was one of the most populous nations in Africa, with more than 80 million people, with a banking sector for now dominated by the state.