EQUITY BANK 9 MONTH PROFIT AFTER TAX RISES 42% TO 7.3 BILLION

Equity Bank Group today morning released its financial results for the 9 months period ending September 30^th 2011.

Profit After Tax was up 42.3% to stand at Kshs. 7.3 Billion. The Bank registered a Profit Before Tax of Kshs. 9 Billion, a growth of 39.1%  

For its Half Year Results for 2011, Equity Bank had seen Profit Before Tax and Profit After Tax shoot up 51.8% and 57.4% respectively

The last 3 months have been a difficult operating environment for banks which has been characterized by rising inflation and rate hikes by the Central Bank of Kenya. Many banks also hiked their base lending rate. (See previous article on http://kenyainvesting.blogspot.com/2011/06/likely-impact-of-high-inflation-on.html)

But the period was also characterized by huge volatility of the Kenya Shilling and Equity has seen huge growth in Foreign Exchange Trading Income, with that income segment more than doubling.

Subsidiaries contributed Kshs. 595 Million or 8.15% of Profit After Tax in comparison to the 366 Million loss they had last year

2010 vs. 2011 Analysis

	2010  Kshs.	2011  Kshs.	% CHANGE
TOTAL ASSETS	136.6 BILLION	195.4 BILLION	+43%
NET LOANS AND ADVANCES	70.9   BILLION	109.4   BILLION	+54.2%
CUSTOMER DEPOSITS	97 BILLION	144.5 BILLION	+48.9%
LOAN:DEPOSIT RATIO	73.1%	75.7%	+2.6%
TOTAL INTEREST INCOME	9.9 BILLION	13..56 BILLION	+37.1%
TOTAL INTEREST EXPENSE	1.5 BILLION	2.44 BILLION	+63.3%
NET INTEREST INCOME	8.4 BILLION	11.12 BILLION	+32.5%
TOTAL OPERATING INCOME	16.5 BILLION	20.46 BILLION	+23.9%
TOTAL OPERATING EXPENSE	10 BILLION	11.47 BILLION	+14.2%
COST:INCOME RATIO	60.9%	56.1%	-4.8%
PROFIT BEFORE TAX	6.46 BILLION	9 BILLION	+39.1%
PROFIT AFTER TAX	5.13 BILLION	7.3 BILLION	+42.3%

Gross Non Performing Loans was slightly down 2% to Kshs. 3.5 Billion

Net Non Performing loans however was down 27.3% to Kshs. 1.44 Billion from Kshs. 2 Billion

The Cost: Income ratio was down 4.8% to 56.1%

Foreign Exchange Trading Income trading income surged by 155.8% to Kshs. 1.53 Billion from Kshs. 597 Million

Staff Costs were up 9.2% to Kshs. 4.1 Billion

Total Fees and Commissions registered an increase of 12% Kshs. 5.7 Billion

It will come as no surprise that during the period under review, Interest Expenses rose at a much faster pace than Interest Income

The bank significantly reduced Securities ‘held for dealing purposes’.

Interest from Government Securities increased by 35.24% to Kshs. 1.97 Billion, this constituting 14.5% of Total Interest Income

Interest from Loans and Advances was up 33.5% to Kshs. 11.2 Billion this representing 82.6% of Total Interest Income

Q2 2011 vs. Q3 2011 (Quarter on Quarter Analysis)

	Q2 2011          Kshs.	Q3 2011          Kshs.	% CHANGE
TOTAL INTEREST INCOME	4.3 BILLION	5.24 BILLION	+21.9%
TOTAL INTEREST EXPENSE	620 MILLION	1.4 BILLION	+124.8%
NET INTEREST INCOME	3.68 BILLION	3.85 BILLION	+4.6%
TOTAL OPERATING INCOME	6.63 BILLION	7.3 BILLION	+10.1%
TOTAL OPERATING EXPENSE	3.67 BILLION	4.15 BILLION	+13.3%
COST:INCOME RATIO	55.27%	56.83%	+1.6%
PROFIT BEFORE TAX	2.97 BILLION	3.15 BILLION	+6.3%
PROFIT AFTER TAX	2.40 BILLION	2.56 BILLION	+6.1%

Interest Expenses more than doubled in the 3^rd Quarter in comparison to the 2^nd Quarter.

Cost:Income ratio was also slightly up 1.6% to 56.83%

Generally, expenses grew at a faster rate than income Q3 vs. Q2 period

The bank still proved resilient in the harsh environment and managed to grow profits in the 3^rd Quarter by 6% more than in the 2^nd Quarter

Earnings Per Share rose to 2.63/=. At the current price of 18.85/=, this represents a Price to Earnings ratio of 7.17.