By Thuothuo Anthony | Boston, MA
Equity Bank has reported a 6.1% drop in net profit for the quarter ending March 2017. At the same period last year, the bank’s net profit stood at Sh5.13 billion compared to this year’s period which closed at Sh4.83 billion.
The group’s CEO Dr. James Mwangi attributed the drop in profit to recently signed law by the president capping loan interest rates.
“A cautious approach in credit underwriting because of inability to price risk saw the loan book decline by 5 per cent from Sh275 billion to Sh262 billion,” added Mr Mwangi on Thursday at an investor briefing.
The giant lender reported a Sh13.1billion drop in its loan book which translates to a 5% drop. The group also recorded a 37.1per cent drop in net interest income from customer loans.
Equity Bank announced that the group will invest more in treasury bills in a move to reduce risk and increase profits following the new law that caps the interest rates.
The group’s loan loss provisions increased by 11.5 per cent to Sh796.9 million in the first quarter.
The non-performing loan portfolio increased by 44 per cent to Sh19.5 billion in the first quarter, with interest expenses increasing by 5% to Sh. 2.57 billion.
The group CEO Dr. James Mwangi said that the lender will continue to focus on digital banking in an effort to reduce costs and increase growth.