Equity Group Holdings has proposed a massive KES 15.1 billion dividend payout after reporting record profits of KES 43.7 billion for 2023. The proposed dividend amounts to KES 4 per share, a staggering 36% of profits.
“The KES 4 per share dividend amounts to a 36% payout of the KES 43.7 billion Profit After Tax and dividend yield of 11.9% on the 2023 year-end closing share price,” said Dr. James Mwangi, Equity Group Managing Director and CEO, in announcing the results.
The stellar performance was driven by a 21% increase in net interest income to KES 104.2 billion and an impressive 30% rise in non-funded income to KES 75.9 billion. Trade finance revenue surged 90% to KES 11 billion.
However, loan loss provisions spiked 139% to KES 32.8 billion as the group strengthened buffers against future risks. “Prudent risk management culture led the board to approve derisking by providing for lifetime expected losses on outstanding NPLs and increasing provisions,” Dr. Mwangi explained.
The results showcase Equity’s emergence as a regional powerhouse, with 50% of assets, 51% of revenue, and 56% of pre-tax profits coming from subsidiaries outside Kenya. Its new acquisitions in Rwanda have given it the second-largest market share there.
“Equity Group has evolved into an integrated financial services and technology platform…the future spans beyond banking in keeping with customer needs across banking, insurance, technology and sustainability,” Dr. Mwangi stated.
The group’s new insurance business grew total assets four-fold to KES 19.2 billion with a 39% rise in pre-tax profits to KES 934 million. Its technology platform enabled 6.2 million digital loans worth KES 284.6 billion.
Despite being allowed to raise rates, Equity chose to maintain 32% of consumer loans at 13% to cushion civil servants and salaried workers. “We opted to maintain loans at 13% to cushion customers during this difficult period of high inflation and interest rates,” said Dr. Mwangi.
The group’s social impact foundation trained over 517,000 entrepreneurs, disbursing KES 275.3 billion in loans that created 1.3 million jobs. Other initiatives included planting 25 million trees, distributing 420,000 clean energy products, and supporting 3.8 million farmers.
“With strong regional positioning, a diversified model, execution capabilities and resilience, Equity is uniquely positioned to deliver for all stakeholders,” Dr. Mwangi concluded.
Analysts see the massive dividend as a bold signal of Equity’s confidence amidst global headwinds. The group has demonstrated its ability to deftly navigate multiple shocks over seven turbulent years while rapidly expanding across East Africa.