According to The Banker’s Top 100 African Banks ranking for 2020 Equity, is now ranked among the top 10 banks in Africa. The financial institution, achieved this impressive feat with a score of 5.82 in the overall category of the Best Performing Banks, coming in at 7th place. This makes Equity the very first bank in both Eastern and Central Africa to achieve the feat.
The rankings for 2020, reflect the stability in finances of a large number of major lenders in Africa. The ranking essentially monitors the wealth and health of the banking sector in Africa, and also utilizes a number of yardsticks like the financial soundness, leverage, growth performance overall, return on risk, as well as profits on capital.
In the reviewed year (2020) Equity which had a balance sheet size of 673.7 billion Kenyan Shillings at the end of 2019, stepped up its performance with a profit of 14 percent after tax growth to 22.6 billion Kenyan Shillings from 19.8 billion Kenyan Shillings achieved in 2018.
Its spectacular performance especially during an interest capping period, was spearheaded by a 23 percent growth in its loan book from 297.2 billion Kenyan Shillings in 2018, to 366.4 billion Kenyan Shillings.
The Chief Executive Officer (CEO) and Managing Director; Dr. James Mwangi revealed that the improved cost optimization and efficiency, resulted in the cost to income ratio improving to 51 percent from 52.4 percent in 2018.
Equity has also held its yield on interest earning assets, steady at 11.2 percent, effectively withstanding a declining yield curve as well as the obstacle of interest capping.
Innovation has been a major player in enabling its growth, with the financial institution already achieving more growth as a result of digitization.
On the category of Financial Soundness, Equity came out 5th on the strength of a supple balance sheet with a core capital to risk weighted asset ratio of 19.8 percent, a loan deposit ratio of 75.9 percent, a liquidity of 52.1 percent
Equity’s balance sheet revealed a firm diversified funding which had customer deposits being 72 percent of the total funding. Long term borrowing stood at 8 percent of the total funding and shareholders stood at 17 percent of the total funding.
The financial institution’s Financial Soundness was also additionally boosted by the its powerful capital base that is safely within both the internal limits and the regulatory limits, net loans and solid business performance stood at 54 percent of the total assets, with government securities, cash and cash equivalents standing at 26 percent and 13 percent of the total asset allocation respectively.
Equity’s Chief Executive Officer (CEO) and Managing Director; Dr. James Mwangi said, “The ranking is an indication that Equity remains robust, despite the challenging operating environment. We have developed and adopted a sustainable business model to cushion the business as well as boost value creation for shareholders.”
In The Banker’s Top 1000 World Banks for 2020, Equity Bank was ranked at 20th on Return On Assets, 55th in the categories of Profits On Capital, 62nd in Financial Soundness (with regards to Capital Assets to Assets Ratio), and 754th in overall balance sheet size.
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