Equity Bank Group third quarter profits soars 26%

Equity Bank Group yesterday announced that its profit after tax for the third quarter of 2014 grew by 26% to Kshs. 11.2 billion up from Kshs. 8.9 billion in the same period last year.

With a complement of 9.2 million customers, the bank’s net income recorded enhanced growth during the trading period ending September 2014, in what Equity Bank Group CEO, Dr. James Mwangi attributed to growing economic activity across the region. Inter country and regional trade within the East African community has risen to above 30%.

The bank’s successful implementation of its regional expansion strategy saw Equity Bank Tanzania, Uganda, Rwanda and South Sudan subsidiaries collectively posting a 51% and 137% growth in deposits and a profit after tax respectively promising growing contribution by the regional subsidiaries going forward. 

Additionally, the bank’s strategy to grow its alternative strategic income streams was further re-affirmed with a growth of 23% being realized against the bank’s net interest income growth of 9%. Merchant business commissions posted a 69% growth while insurance, custodial and brokerage fees rose by 35%, Diaspora remittances grew by 19% and foreign exchange trading income grew by 15%.

The Bank’s agency banking network also maintained its rapid development and now has 15,875 agents representing a 70% Year on Year growth. Plans, Dr. Mwangi said, are also underway to expand the agency offering to include other services including Insurance and Air Ticket sales. Added Dr. Mwangi, “Agents are now processing more cash withdrawals and deposit transactions than the branches and ATMs combined.”

Comparatively, Equity Bank Group’s  revenues drawn from other Fees and commissions income at Kshs 6.5billion up from Kshs 5.1billion registered within the same period last year, appears to be growing faster than the Fees and commissions income on loans & advances which has been a traditional income driver for commercial banks. Further confirming the bank’s growing reputation as an economic development financier, Equity Bank’s loan book grew by 30% to Kshs 206.7billion up from Kshs 158.6billion and was supported by a 27% growth in deposits of Kshs 243Billion up from Kshs 192Billion and a 38% growth in long-term debt to Kshs 34Billion up from Kshs 24Billion.

The Bank achieved a notable improvement in the quality of the loan book with a reduction of cost of risk from 2.7% to 0.6% resulting in reduction of provisions for bad debts from Kshs 2.4 billion to Kshs 900 million while at the same time enhancing NPL coverage from 52% to 62%.  The quality of the loan book improved significantly reducing the ratio of non-performing loans from 5.5% to 4.3%.

The Bank’s total operating income rose by 14% to close at Kshs 34.5Billion up from Kshs 30.2Billion posted in the same period last year while total expenses marginally grew by 6% from 17.7Billion to stand at Kshs 18.8Billion resulting in profit before tax growth of 25% to Kshs 15.9 billion up from Kshs 12.6 billion. Return on Equity improved to 27.6% up from 26.4 % while return on assets increased from 4.9% from 4.6% for the same period last year. Despite a reduction of 30% in lending rates, net interest margin declined marginally due to sustained cost of funds. The decline on interest yield saw income cost ratio deteriorate slightly from 46% to 48%.

Speaking when he released the bank’s 3^rd quarter results, Dr. Mwangi acknowledged that the current growth comes hot on the heels of a rapid expansion of East African economies as witnessed by the recent rebasing of Kenya’s GDP which reflected a 25% expansion of the economy. The sustained 6-8% growth rate of Tanzania, Rwanda and Uganda over the recent past boosted the performance of the regional banking subsidiaries.

“Recent Vision 2030 infrastructure investment in energy, roads, ports, airports, railways and revival of manufacturing and construction sector will offer enormous banking opportunities going forward,” an optimistic Dr. Mwangi said. Dr Mwangi also observed that the changing global perception about Kenya and rebranding of the East Africa as an oil rich region and relocation of global brands’ Africa head offices to Nairobi together with the upgrade of the UNEP office into a Class 1 status UN Office will enhance business attractiveness of the region.

Dr. Mwangi acknowledged that the current growth comes hot on the heels of the recent launch of American Express products in Kenya as part of the bank’s Equity 3.0 corporate growth strategy announced early this year.

The partnership with American Express will facilitate Equity Bank to serve American Express Card Members from any part of the world visiting East Africa. Currently, American Express holds more than 107.2million cards worldwide with US$ 33Billion annual revenues.

“With the recent launch of American Express products locally, Equity Bank is now firmly entrenched as the bank with the widest international payments partnerships and ecosystem in Sub Sahara Africa,” Dr. Mwangi said. “Indeed, we are now a preferred partner for American Express, Visa, PayPal, Google and Union Pay, SWIFT, JCB, VFX, Diners Club and MasterCard,” he added.

“The strong financial performance that Equity Group has experienced throughout 2014 is an encouraging indicator that the Equity 3.0 strategy is off to a good start with a clear chance of growing our revenues further once the complementary business drivers such as our MVNO operations are commercially launched,” said Dr. Mwangi.

As part of the Equity 3.0 Strategy, the Bank plans to enhance its payment systems significantly on all fronts including mobile based platforms.

Savannah cement ready to support annuity financed road contractors

Local cement manufacturer Savannah Cement has expressed an interest to join pre-qualified road contractors as a materials supplier in the new Kshs 260Billion annuity financing program.

 

The new program, which is expected to kick off in January next year will see a pool of 49 shortlisted road construction contractors commencing works to develop the first phase of a projected 10,000Kms tarmacked roads in the next five years.

Under the annuity program, the government will negotiate uniform loans from banks while the contractors will design, build and maintain the roads. The first phase of the programme will cover a projected 2,000kms at an estimated cost of Kshs 40 Billion and is expected to act as a pilot for the new alternative road construction financing model.

By expressing commitment to partner with the shortlisted contractors, Savannah Cement becomes the first Cement Company and major materials supplier to firmly endorse the new road construction financing model.

Speaking during an Institution of Engineers of Kenya (IEK) symposium on annuity financed road projects, Savannah Cement Managing Director Ronald Ndegwa said that the firm will be at hand to support the prequalified contractors through the supply of specially formulated road construction cement products. During the symposium officiated by Infrastructure Principal Secretary John Mosonik, Ndegwa pointed out that Savannah Cement  will also provide technical support and logistics solutions to the contractors to guarantee cost efficiencies.

“As a key materials supplier, Savannah Cement acknowledges that existing infrastructure funding gaps can be drastically reduced by eliminating inefficiencies and adoption of appropriate technologies and financing strategies such as the annuity programme,” Ndegwa noted.  

“In addition to such support, we have also gone a step further to develop a Hydraulic Road Binder (HRB) to be used in stabilization of soils and gravels in road construction projects,” he added.

The new Savannah Cement HRB product, he disclosed, will retail at cheaper cost than conventional cement and lime mixes which are routinely used for soil stabilization in road construction. Consequently, the new Savannah Cement HRB product is expected to contribute at least 30% approximate cost savings in stabilization costs.

Savannah Cement, recently expressed a commitment to produce market driven products in a collaborative partnership with local building and construction professionals.'

“At Savannah Cement, we are committed to partnering with all players in the building sector to provide solutions in the construction industry,” Ndegwa assured. Adding that: “in this process, we are willing to involve stakeholders such IEK in our product development processes; to ensure we deliver market driven products.”

To grow its local and regional market share Savannah Cement has already lined up development projects valued at more than US$300Million which include an investment plan to establish a clinker manufacturing facility and commission the second grinding plant at its production complex, near Kitengela township.

Already, Savannah Cement has invested more than US$100million to develop one of the most advanced and ecofriendly cement manufacturing plants in sub-Sahara Africa with a 1.5million tons annual production capacity.

The Savannah Cement boss explained that the firm’s manufactured cement types (Savannah 32.5R and Savannah 42.5R) are uniquely formulated to meet all building needs. Carrying the ‘R’ quality classification, Savannah Cement products are specially formulated to provide rapid strength development which ensures improved customer profitability through enhanced productivity and construction efficiency.

Savannah Cement, products also provide enhanced strength at all ages assuring superior concrete performance as well as unmatched durability with great aesthetics.

Airtel to stock iPhone 6 and iPhone 6 Plus

Bharti Airtel has today announced it will offer iPhone 6 and iPhone 6 Plus, the biggest advancements in iPhone history, beginning 14^th November 2014. For more information on iPhone, please visit: www.apple.com/iphone. 

Airtel customers in Kenya will get the chance to get their hands on the most sought-after mobile devices of the year, the iPhone 6 and iPhone 6 Plus in all Airtel outlets in Kenya.

While making the announcement, Airtel Kenya CEO Adil El Youssefi said: “Airtel is responding to its customers' demands for the iPhone 6 devices and we are very excited to make these latest innovations from Apple available in Kenya.  Airtel customers will be able to fully take advantage of all the features of these latest mobile devices on our 3G network."

Mr. El Youssefi added: “From a business perspective, smart phone penetration is linked to strong data growth. This is demonstrated through internal data which shows that iPhone smartphones generate more data than feature phones.”   

With Airtel’s fastest and latest 3G network, iPhone 6 users will experience faster download and upload speeds for browsing the web, streaming music, making video calls, and more. Airtel network coverage also guarantees high-quality calls that make customers’ conversations clearer.    

Bidco in the run for transformational Africa Awards for entrepreneurship

Bidco Oil is among the top 12 finalists named by the African Leadership Network (ALN) for the 2014 Africa Awards for Entrepreneurship (AAE). The winners will be announced at Kigali, Rwanda on  November 7^th, 2014.

According to a statement released by the African readership Network, ALN’s CEO, Isaac Kwaku Fokuo, Jr., said, ‘’These finalists represent the strong emerging entrepreneurial class that our continent needs. They are not only business owners: they are Africa's new innovators, investors, and drivers of social change. This year's finalists represent the future of the African continent.’’

Bidco is a finalist under the Transformational Business award category for its inclusive growth and sustainability program. As a strong supporter of communities within its operating environments along the value streams, Bidco has managed to register over 30,000 farmers registered on its rolls of whom 10, 000 farmers sell their oil seeds to the company. These farmers are given training and assistance to enhance their productivity and lifestyles.

At the other end of the value chain, the company promotes entrepreneurship and growth among small and large retailers, traders, suppliers and distributors with cashless trading facility and supply management that ensures quick deliveries.

Commenting on the award Bidco Group, Chief Executive Officer, Vimal Shah, said, “We are honoured and humbled at the same time. Awards such as these only reiterate our commitment to excellence and pushes us towards higher goals. Bidco has set a benchmark in its quality adherence and in abiding by the “Inclusive business’ model. Awards such as these will help others across the continent understand and follow sustainability models which will not just help the business grow but every stakeholder – from the regions’ economy to local community, consumers, environment, etc.    It bodes well for truly African companies that we are reaching world class standards.”

In addition, the group is a signatory to the UN Global Compact, a strategic policy initiative for businesses that are committed to aligning their operations and strategies with 10 universally accepted principles in the areas of human rights, labor, environment and anti-corruption. In line with its slogan of “happy healthy living,” Bidco is firmly committed to the provision of a healthy and safe working environment for its staff. In its commitment to equal rights, Bidco aims to ensure that no job applicant shall receive less favorable treatment on the ground of sex, marital status, sexual orientation, race, color, religion or belief, nationality or ethnic or national origin.

The finalists are drawn from 9 African countries representing many different industries including retail, manufacturing, consumer services, e-commerce, agriculture, ICT, transportation & logistics, education, health, and sanitation. Each year, it awards over USD $200,000 in prize money to outstanding African entrepreneurs who demonstrate business excellence and social impact.